Managerial Economics

Chapter 12

Oligopoly and Strategies of Pricing

After studying this chapter, you should be able to understand:

• Oligopoly is a market structure, where there are a few sellers of the product, which may be homogenous or differentiated.
• Since there are only a few firms in the industry, the actions of one firm influence other firms in the industry. Thus, there exists a mutual interdependence between the firms.
• There is no set pattern in an oligopoly. There exist many models each based on a different set of behavioural assumptions.
• Under non-collusive oligopoly, there are no implicit or explicit agreements relating to the price or to the sharing of the market.
• Cournot equilibrium exists at the point, where the two reaction curves intersect.
• The kinked ...