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In an oligopolistic market, firms pay close attention to the strategies of their rivals. In monopolistic competition, with a large number of sellers, it is assumed that there is not this kind of rivalry or interdependence. Why is there probably some rivalry in many monopolistically competitive markets?

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Related questions

In economics, what is meant by an Oligopoly?

What are some ways to make a distinction between an Oligopolistic Market and a Market identified as having Monopolistic Competition?

Use the Keat and Young textbook as a basis for explaining the role of non-price competition within an oligopoly.

Explain The Kinked-Demand model of oligopoly, and why this model concludes that oligopolists are reluctant to compete with each other on the basis of product price.

Then choose one additional theory of Oligopoly behavior, and explain how strategies/counter-strategies and/or rivalry influence the decision making by the firm.

Throughout your answer to this question, use graphs, completely labeled, to accompany your written analyses.

1) During the past 20 years, Marzi Corp., a large firm in an oligopolistic industry, has changed prices a number of times. Each time it does so, the other firms in the industry follow suit. Dominator Inc. is a _____.

Ā  A. price follower Ā 
Ā  B. price leader Ā 
Ā  Ā  C. monopolistically competitive firm Ā 
Ā  D. monopolist Ā 
Ā  Ā  Ā  E. perfectly competitive firm

2) The restaurants in San Francisco can probably be categorized as examples of firms

Ā  A. operating in an oligopolistic market. Ā 
Ā  B. operating in a monopolistically competitive market Ā 
Ā  C. operating in a perfectly competitive market Ā 
Ā  D. forming a cartel. Ā 
Ā  E. operating in a monopolistic market Ā 

3) Which of the following is not a source of product differentiation?

Ā  a. Prestige considerations in products Ā 
Ā  b. Differences in the cost of production of products Ā 
Ā  c. Physical differences in products Ā 
Ā  d. Differences in the services provided by firms Ā 
Ā  e. Differences in the location of sales outlets

Multi-country competition refers to industry and competitive situations where:

A. No domestic companies have king-sized market shares and each national market has many competitors.
B. Each country market is self-contained Ā¾ competition in one national market is independent of competition in other national markets and, as a consequence, there is strictly speaking no "international market" or "world market".
C. Domestic rivals pursue focused or market niche strategies and do not compete internationally.
D. Domestic companies have a competitive disadvantage in competing with foreign rivals that operate in many different countries.
E. Most competitors operate in more than two country markets but rarely in more than 20.

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