3.4 - Oligopoly

Question 1

What is an oligopoly?

Answer 1

Imperfectly competitive industry
Dominated by few large firms
High market concentration

Question 2

What are the characteristics of oligopoly?

Answer 2

Dominance of few large firms
High concentration ratio
High entry + exit barriers
Interdependent firms
Price making firms

Question 3

What is strategic interdependence?

Answer 3

Firms aware of competitors actions
Competing firms influence each others decisions
Can lead to/worsen collusion

Question 4

What is the requisite 5-firm concentration ratio for an oligopoly?

Answer 4

60%

Question 5

What is non collusive behaviour in an oligopoly?

Answer 5

Firms compete
Various price + non-price competition methods

Question 6

What can non-price competition consist of?

Answer 6

Quality/Design
Marketing campaigns
Customer service
Environmental sensitivity
After sales service

Question 7

What is business collusion?

Answer 7

Firms communicate/work together in order to influence price/output

Question 8

What are the 2 types of collusion?

Answer 8

Formal/Overt
Tacit