Describe
oligopoly.
Answer: When an industry has only a few sellers, an
oligopoly exists. While there are only a few sellers, they tend to be large.
The entry of new competitors is difficult because of the large capital
investment needed. As with monopolistic competition, sellers will attempt to
differentiate their product from those of their competitors, and each seller
will have some control over price. However, when one firm cuts prices, others
will tend to do the same. Therefore, the prices of comparable products are
usually similar.
Source: Business Essentials, 8e (Ebert/Griffin)
– Global Edition
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