ECO100Y5 Chapter Notes - Chapter 14: Tacit Collusion, Monopolistic Competition, Nash Equilibrium
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ECO100Y5 Full Course Notes
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Oligopoly, is a type of market structure in which there are only a few producers example airplanes. Oligopoly is not necessarily made up of large rms it just depends how many competitors there are. Important: increasing returns to scale b/c bigger producers have a cost advantage example larger grocery store usually have lower costs. In addition to perfect competition and monopoly, oligopoly and monopolistic competition are also important types of market structures. Oligopoly is a common market structure, one in which there are only a few rms, called oligopolists, in the industry. It arises from the same forces that lead to monopoly, except in weaker form. Some of the key issues in oligopoly can be understood by looking at the simplest case, a duopoly. An oligopoly consisting of only two rms is a duopoly. With only two rms in the industry, each would realize that by producing more, it would drive down the market price.
