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Chapter 9-2: oligopoly - Coggle Diagram

- - - - Few sellers
        
        Offering similar or identical prodycts
        
        no threat of entry
      - Concentration Ratio
        
        The percentage of the market's total output supplied by its four largest firms.
        
        The higher the concentration the less competition.
        
        CR = Addition of first 4 highest sellers / The whole market
      - The best outcome for oligopoly firms is when they cooperate and act like a monopolist by producing a small quantity of output, charging a price above marginal cost, and maximizing joint profit
      - The failing of cooperation between the firms is actually a benefit for the society, lower prices, higher quantity, and higher surplus
        
        Thus for market efficiency, some laws prohibit certain cooperations.
      - As firms increase, the market moves toward a competitive market.
    - - Many firms
        
        Offer similar but not identical products
        
        possibility of entry and exit
    - - Simplest case of oligopoly, two members only.
      - When firms in duopoly choose to benefit indivisually
        
        They produce more than monopoly, less than competitive
        
        Duopoly price is lower than monopoly but higher than competitive
        
        Duopoly profit is les than monopoly but higher than competitive
        
        Market surplus is hogher in duopoly than monopoly, but lower than competitive
        
        Deadweight loss, and inefficiency in duopoly are lower than monopoly