ECO100Y5 Chapter : Price Determination under Oligopoly.docx

• School: UTM
• Department: Economics
• Course: ECO100Y5
• Professor: Michael H O

Document Summary

Oligopoly is that market situation in which the number of firms is small but each firm in the industry takes into consideration the reaction of the rival firms in the formulation of price policy. The number of firms in the industry may be two or more than two but not more than 20. Oligopoly differs from monopoly and monopolistic competition in this that in monopoly, there is a single seller; in monopolistic competition, there is quite a larger number of them; and in oligopoly, there are only a small number of sellers. The oligopolistic industries are classified in a number of ways: (a) duopoly: if there are two giant firms in an industry it is called duopoly. Degree of product where prevalent of control over price. Product without close electricity, and gas usually regulated substitutes. The firm generally avoid price ware and try to create conditions of mutual interdependence.