4.1.3 Oligopoly Flashcards
What is a concentration ratio
Concentration ratio represents the total of n number of the top firms market share.
What is the competition structure like in an oligoploy?
High barriers to enter the market. Firms in an oligpoloy are very interdependent with each other. As a result a sense of price stability is created in oligpoly markets. Firms will set prices according to their competitiors either through tacit agreements or explicitly (collusion/ cartel behaviour) and cooperate. Thus non-price competition is very common and price rigidity.
Define tacit agreement
A tacit agreement is an implicit agreement between two or more firms within an oligopoly market to engage in anti-competitive behaviour.
done without a formal agreement,
What is price discrimination?
This is where firms charge different prices to different consumers. Third-degree price discrimination is where different prices are charged based on the different characteristics of the consumers e.g age.
