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Flashcards in Oligopolies Deck (3)
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1

Characteristics of Oligopolies

1) There are entry barriers

2) Products may be similar or differentiated

3) Market is dominated by a small number of firms

4) Firms are mutually interdependent

2

Collusion

A basic dilemma of a girl in an oligopoly:

Should it compete against other firms or collude with other firms?

If the firms collude, they can form a CARTEL (A group of firms acting like a single firm)

3

Cartels pros and cons

PROS

Cartels usually make more money when together

Profit of a Cartel > Profit without a cartel

CONS

1. Illegal

2. Individual members may be able to increase profits y cheating on the cartel