Oligopoly
It is characterized by the fact that the industry is made up of a few large firms, which means that the concentration ratio is high.
5Characteristics of Oligopolyindustry:
- It isdiminated by a new large firms.
- Entry by new firms is difficult.
- Nonprice competition between firms is widely practised.
- Each firm has significant control over its price.
- Mutual interdependence exists between firms.
Game theory
It a method of analyzing firm behavior that highlights mutual interdependence among firm.
How did it develop?
It was first develop by economists John Neumann and Oskar Morgenstern in the 1940's to analyze strategic behavior. This idea can be applied not just to oligopoly theory but also to any situation where people seek to work out the best possible action, taking into consideration the possible reactions of rivals.
Describe the principles behind collusive and cartel action.
Collusion is an agreement among suppliers to set the price of a product or the quantities each will produce, Cartel is used to describe a formal agreement of cooperation among firms.
No comments:
Post a Comment