Oligopolies

Question 1

Characteristics of Oligopolies

Answer 1

1) There are entry barriers
2) Products may be similar or differentiated
3) Market is dominated by a small number of firms
4) Firms are mutually interdependent

Question 2

Collusion

Answer 2

A basic dilemma of a girl in an oligopoly:

Should it compete against other firms or collude with other firms?

If the firms collude, they can form a CARTEL (A group of firms acting like a single firm)

Question 3

Cartels pros and cons

Answer 3

PROS

Cartels usually make more money when together

Profit of a Cartel > Profit without a cartel

CONS

1. Illegal
2. Individual members may be able to increase profits y cheating on the cartel