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Lecture 9 (Oligopoly and Price (producers create demands, have similar…
Lecture 9
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Key factors of oligopoly
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Country Level, Perfect competition
Oligopoly
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Non Collusive oligopoly
It is a form of market in which few firms. Each firm has its price and output policy is independent of the rival firms in the market. The entire firms enable to increase its market share through competition in the market.
Collusive Oligopoly
It is a form of market in which few firms form a mutual agreement to avoid competition. They form a cartel and fix the output quotas and the market price. Leading firm in the market is accepted by the cartel as a price leader. All the firms in the cartel accept the price as fixed by the price leader.
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rigid prices
Price rigidity refers to a situation in which price is kept fixed. It is so because if a firm reduces the price in the oligopolistic market, the other firms in response will cut down their prices at a higher level.
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