4955977
Descrição
Mapa Mental por james liew, atualizado more than 1 year ago
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Criado por james liew
mais de 8 anos atrás
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Oligopoly
- A market situation where there are small no. of
large firms in the industry, and where firms are
interdependent and collude with each other
- Characteristics of an Oligopolistic Market
- Few Sellers in the Industry:
they tend to be price setters
rather than price takers
- Interdependence between Firms: they
will take into account the likely
reactions of their competitors
- Product Differentiation Occurs: the goods
that firms sell are close substitutes
- Barriers to Entry are high
- High set-up costs
- Access to expensive technology
- Brand proliferation
- High set-up costs
- Collusion May Occur
- Non-price Competition Is More
Common than Price Competition
- Persuasive advertising
- Competitive Advertising
- Informative Advertising
- Persuasive advertising
- Few Sellers in the Industry:
they tend to be price setters
rather than price takers
- The Kinked Demand Curve
- Paul Sweezy
- A firm's competitors would not follow a price
increase but would instead increase their market
share by selling more at existing prices and
thereby gaining extra profit. If price was reduced
then all firms would similarly reduce their prices
- Price Rigidity: a situation where firms are
unwilling to enter into price competition
- Long Run: SPECS
- The firm is earning SNP because AR>AC
- Price charged at P and quantity produced at Q
- Equilibrium occurs at MC=MR
- Scarce resources used efficiently as firm
is producing at lowest point of AC
- If costs rise, then market price tends to remain constant
- The firm is earning SNP because AR>AC
- Paul Sweezy
- Collusion in Oligopolistic Markets
- Any action undertaken by separate and rival
firms to restrict competition between them
with a view to increasing their total profit
- Types of Collusion
- Output Policy: firms could join together to
limit output to certain agreed amounts
- Sales Territories: firms could divide up the
markets between them and agree not to
compete in each other's market segments
- Limit Pricing: existing companies may not wish to
encourage new entrants by earning SNP. Instead
they lower their prices so low it is unattractive to set up
- That existing company sacrifices larger profits
for long-term survival
- That existing company sacrifices larger profits
for long-term survival
- Output Policy: firms could join together to
limit output to certain agreed amounts
- Any action undertaken by separate and rival
firms to restrict competition between them
with a view to increasing their total profit
- Pursuing Objectives Other than
Profit Maximisation
- Government Intervention: may decide
against earning huge SNP for fear the
government will restrict their acctivities
- Limit Pricing
- Managers Not Owners
- Managers May Pursue Increased Sales
- Satisfactory Profit Levels: owners may
want more leisure time
- Government Intervention: may decide
against earning huge SNP for fear the
government will restrict their acctivities
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