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Economics - Ethan Parmar > T6 - Oliogopoly > Flashcards

T6 - Oliogopoly Flashcards

1
Q

What is an oligopoly

A

Where there are a few dominatnt firms

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2
Q

Features of an oligopoly

A

Interdependece
Possibility of collusion
Product differentiation
Soem barriers to entry
5 firm concerntration ration > 50

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3
Q

Barriers to entry in an oligopoly

A

Predatory pricing
Advertising
Multiplicity of brands
Intergration
Non price como
Branding
R&D

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4
Q

What does teh way firms compete depend on

A

Objective of firm
Degree of conetsatbility
Gov reg

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5
Q

What are some outcomes for a oligopoly

A

Stable prices
Price wars
Collusion

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6
Q

What does a kinked demand curve say happens when prices rise

A

Demand is negatively elastic, as other firms wont icnrease price, therefore demand is lwo

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7
Q

What does a kinked demand curve say when price fall

A

Demand is inelastic, it wont chaneg much, due to other firms also lowering prices to stay comeptitive

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8
Q

What happens when MC changes on a kinked demand curve

A

MR stays the same price doesnt change as firms are willing to keep the intial price

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9
Q

Criticisms of oligopolgy theory

A

No explantion of price determination
Assumes reaction of firms
Doesnt take into accoutn discounts and offers
Firms may want to lwoer prices
Ignores NPC
Barometric price leaders stuff
Firms cant afford to lower prices

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10
Q

Possible advantages of a monopoly

A

High profit for firms
Lower prices due to EoS
Wider and easier choice for consumers
Better innovation
Better informtion for consumers

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11
Q

Possible disadvantages of an olgiopoly

A

Can collude and restrict output and prices
Small competitive firms cant comepete

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12
Q

How firms compete in an oligopoly

A

Customisation
Loss leaders
Ads
New products
Location
Online reviews
Quality of workers

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13
Q

What is game theory

A

Where one player’s decision depends on what the other player does

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14
Q

What is formal collusion

A

Firms have some formal agreement
They agree on P and Q

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15
Q

What are cartels

A

Firms forming allegiences
High barriers to entry

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16
Q

What makes cartels mroe succesful

A

More simialr products

17
Q

What do cartels and collusion allow firms to do

A

Act as a monopoly

18
Q

Outcoems for consumers of cartels

A

More expensive products
Reduction in consuemr suprlus
Increase in non price comp can beenfit consuemrs though

19
Q

Outcoems for prodcueers of cartels

A

Increase sales rev and prodi
More comp on no price comp
Further r and d
Higher market share

20
Q

What is informal collsuion

A

Where one firm acts as a price leader, and the others follow

21
Q

Exampels of informal collusion

A

Barometric price leaders
Parallel priceing
Tactit colllision

22
Q

What are some pricing technqieus

A

Transfer pricing
COst push pricing

23
Q

What si transfer pricing

A

Where MNCs alter prices and costs to benefit from different tax levels

24
Q

What is cost push pricing

A

Once MES is ahcieved, tehy will have a clear indication of costs, and base it from there

25
Q

How are cartels avoided

A

Rules
Laws
Regualtion
FInes

26
Q

what si transfer pricing, proper def

A

operatign in a place where say low corpriation tax and shit and sellign there at hgiher prices

27
Q

what is marginal costs pricign

A

alloactiev efffeciency

28
Q

what si average cost prciign

A

atc = ar , nromal proits

29
Q

what si prfoti maxmsiign pricign level

A

m c= mr

30
Q

what si revnue maxamsiign price

A

mr == 0

31
Q

what is meant by uncertainty in an oligopoly

A

uncertainty over hwo rivals will react

32
Q

how may rivasl react in an ologiopoly

A

doing the same action
nto followign suit
ifnormal collusion
price wars

33
Q

what may amkign markerts more conetsable in imeprfectly comeptitve markets liek a monopoly ro olgiopoly lead to

A

collsuion
restriced out put
predatory pricing

Economics - Ethan Parmar (73 decks)

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