The Interdependence Between Firms in an Oligopoly Leads to

716 a Distinguish between collusive and non- 15 marks collusive oligopoly. 5 firm concentration ratio of 50.

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The kinked demand curve model should be used as an illustration of the interdependence between firms and not taught as if it is the only model of oligopoly.

. The bulk of market share is vested between Apple and Samsung with Hawaii and Lenovo as close but niche competitors. Advertising and Brands. Interdependence of firms Oligopoly diagram.

In my opinion Smart Phone industry is Oligopolistic in characteristics with few dominant firms in the market. In an oligopoly a price reduction by a company can trigger a price war but it is not the case of monopolistic competition. Where there are only small differences between products differentiation of the product would not be useful unless it could be communicated to the consumer.

Baumol does not establish the relationship between the firm and industry. Government failure occurs when government intervention in the economy leads to a misallocation of resources. Perfect competition Many firms freedom of entry homogeneous product normal profit.

3 The model ignores not only actual competition but also the threat of potential competition from rival oligopolistic firms. In this regard the level of market concentration is high. ____ is an industry made up of a limited number of large firms where there is an interdependence of the major players a.

Common models that explain oligopoly output and pricing decisions include cartel model Cournot model Stackelberg model Bertrand model and contestable market theory. The reason there are more than one model of oligopoly is that the interaction between firms is very complex. Monopoly One firm dominates the market barriers to entry possibly supernormal profit.

2 Another weakness of this model is that it ignores the interdependence of the prices of oligopolistic firms. One key factor that leads to adverse effects on a host countrys _____ accounts is when a foreign subsidiary imports a substantial number of inputs from abroad which results in a debit on the current account. 10 marks 79 a Analyse the role of non-price competition b Discuss the view that governments for firms in monopolistic competition and should always try to increase the degree oligopoly.

The significance of interdependence and uncertainty in oligopoly. Relative Size of firms in the Industry. It depends on whether the product is homogeneous or differentiated.

Oligopoly An industry dominated by a few firms eg.

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