Oligopoly (OCR A-Level Economics): Flashcards
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Practise the cards
15 cards from this deck
Oligopoly
Oligopoly
Market with small number of large, interdependent firms
Concentration ratios
Concentration ratios
Measure market share of largest firms in industry
Non-price competition
Non-price competition
Strategies to attract customers without changing price
Interdependence in oligopoly
Interdependence in oligopoly
Actions of one firm directly affect other firms
Barriers to entry in oligopoly
Barriers to entry in oligopoly
High barriers prevent new firms entering market easily
Price rigidity in oligopoly
Price rigidity in oligopoly
Prices tend to be stable, firms avoid price changes
Kinked demand curve above kink
Kinked demand curve above kink
Demand is relatively elastic (price increases)
Kinked demand curve below kink
Kinked demand curve below kink
Demand is relatively inelastic (price decreases)
MR curve in kinked demand
MR curve in kinked demand
Has discontinuity or gap at the kink
Formal collusion
Formal collusion
Firms openly agree on prices/output levels
Tacit collusion
Tacit collusion
Firms implicitly coordinate without explicit agreements
Product differentiation
Product differentiation
Making products distinct from competitors
Example of formal collusion
Example of formal collusion
OPEC (cartel agreeing on oil production quotas)
CR4 ratio
CR4 ratio
Market share of four largest firms in industry
Concentration ratio calculation
Concentration ratio calculation
Sum of market shares of largest firms (as %)