MCS 1000 Chapter Notes - Chapter 15: Tim Hortons, Monopoly Profit, Oligopoly

• School: University of Guelph
• Department: Marketing and Consumer Studies
• Course: MCS 1000
• Professor: Sergio Meza

Document Summary

The firms in oligopoly might produce an identical product and compete only on price, or they might produce a differentiated product and compete on price, product quality, and marketing. Oligopoly is a market structure in which: natural or legal barriers prevent the entry of new firms, a small number of firms compete. Natural or legal barriers can create oligopoly. Because barriers to entry exist, oligopoly consists of a small number of firms, each of which has a large, share of the market. Such firms are interdependent, and they face a temptation to cooperate to increase their joint economic profit. With a s(cid:373)all (cid:374)u(cid:373)(cid:271)e(cid:396) of fi(cid:396)(cid:373)s i(cid:374) a (cid:373)a(cid:396)ket, ea(cid:272)h fi(cid:396)(cid:373)"s a(cid:272)tio(cid:374)s i(cid:374)flue(cid:374)(cid:272)e the p(cid:396)ofits of all the other firms. Starbucks and tim hortons with their different coupons and offers. When a small number of firms share a market, they can increase their profits by forming a cartel and acting like a monopoly.