Oligopolies Flashcards
1
Q
Kinked demand curve
A
A business faces a dual demand curve for its product, based on the likely reactions of other firms
2
Q
Forms of non-price competition
A
Loyalty schemes
Sales promotions
3
Q
Aims of business collusion
A
- Maximisation of joint profits
- Lowers costs of non price competition
- Reduces uncertainty and increases profits
4
Q
Disadvantages of collusive behaviour
A
Reinforces cartel monopoly power, making it harder for new businesses to enter the market.
Less incentive to innovate due to a lack of competition, loss of dynamic efficiency
5
Q
Advantages of collusive behaviour
A
Faster acceleration in developing new technologies
