Non-Collusive oligopoly

Question 1

Concentration ratios

Answer 1

are calculated by dividing the sum of those few firms market share by total market size (x100)

Question 2

Structure

Answer 2

High concentration ratio
Some monopoly power
Perfect when product is homogeneous

Question 3

3 Game theory strategies

Answer 3

Maximax
Maximin
Dominant strategy

Question 4

Interdependence

Answer 4

High elasticity above equilibrium (close substitutes)
Low elasticity below (price war)
Creates ‘sticky’ prices

Question 5

Vertical range of MR

Answer 5

MC can be as low or high within range before the oligopolist selling price must change to profit maximise
Means stable pricing

Question 6

3 Criticisms of oligopoly theory

Answer 6

No explanation how and why firm produces at point x
Real markets don’t respond in the same way as usually firms ‘test market’
Research has shown oligopolists still raise/lower price in response to costs and demand

Question 7

6 Pricing strategies

Answer 7

Cost-Plus pricing
Price parallelism
Price leadership
Limit pricing
Predatory primary
Price discrimination