💼Oligopolies arise from factors like economies of scale, scarce resources, and government regulations.
🚫Existing firms can use predatory tactics to prevent new entrants from competing.
🔄Oligopolists' actions are interdependent, as they need to consider their rivals' responses.
💰Collusion among oligopolistic firms can lead to higher profits but also instability.
📈The concentration ratio measures the degree of domination in an oligopoly.
What are the barriers to entry in an oligopoly?
—Barriers to entry include economies of scale, scarce resources, government regulations, and long-term agreements with suppliers and distributors.
How do existing firms prevent new entrants?
—Existing firms can use predatory tactics such as product differentiation, advertising, loyalty schemes, branding, predatory pricing, predatory acquisitions, and vertical integration.
Why do oligopolists need to consider their rivals' responses?
—Oligopolists' actions are mutually interdependent. If one firm raises prices, it must anticipate its rivals' reactions to avoid losing customers.
What is collusion in an oligopoly?
—Collusion refers to when oligopolistic firms coordinate to manipulate the market. This can involve price-fixing, setting common standards, or allocating territories.
How is the degree of domination in an oligopoly measured?
—The degree of domination is measured using the concentration ratio, which indicates the percentage of market share controlled by a given number of firms.
00:00Oligopoly is a market structure with a few dominant firms that have market power.
02:59Oligopolies arise from factors like economies of scale, scarce resources, and government regulations.
07:54Existing firms can use predatory tactics such as product differentiation, advertising, and predatory pricing to prevent new entrants.
14:18Oligopolists' actions are mutually interdependent, as they need to consider their rivals' responses to pricing, advertising, and other strategies.
20:10Collusion among oligopolistic firms can lead to higher profits for the group, but it also carries the risk of instability and potential legal consequences.
27:25The concentration ratio is used to measure the degree of dominance in an oligopoly by calculating the percentage of market share controlled by a given number of firms.
31:46Overall, oligopolies are complex market structures with limited competition and strategic decision-making by the dominant firms.
