07 MAY 2021 / / FRIDAY / / FINALS 1ST ACTIVITY
OLIGOPOLY
EXAMPLES OF SWEEZY, COURNOT, STACKELBERG, & BERTRAND
OLIGOPOLY
LAND OF OLIGOPOLIES
What is Oligopoly?
https://corporatefinanceinstitute.com/resources/knowledge/
economics/oligopolistic-market-oligopoly/
An oligopoly is a term which is commonly used to
describe an industry, corporation, or company
whose control is very limited. A market is said to
be oligopolistic or critically concentrated when it's
owned by a few big companies with significant
market share. To put it in other words, they've
created an oligopolistic market, and thus helped
businesses already-small organizations gain a
foothold in a marketplace in which there are a large
number of competitors.
OLIGOPOLY: Oligopoly is the existence of
economic of scale, which give better producers a
cost advantage over smaller ones.
OLIGOPOLY: A market form in which a market is dominated by a small number of sellers.
Models of Oligopoly
DEFINITION & EXAMPLE OF MODELS OF
OLIGOPOLY The third model of oligopoly is
Stackelberg Model, in this modelof
The first model of oligopoly is Sweezy model, or
an oligopoly, one company will set
kinked demand model, where it demonstrates that
the market standard (the leader) first,
price stability can occur in an oligopoly without
then the others will respond with
collusion. Two businesses "disagree" over a sector.
their quality (the follower). An
Observers also noted that if one firm's price was
example of a firm under this model
raised, the other firm's price remained unchanged. An
are General Motors and Ford
example of a firm under this model are T-Mobile, O2,
(Automobile industry). For instance,
Vodafone, & Orange (Mobile Phone Networks). For
When a new company begins
instance, as T-Mobile chooses to raise its prices, its
manufacturing automobiles in
rivals such as O2, Orange, and Vodafone will remain
America and is forced to deal with
unresponsive. However, if T-Mobile were to reduce
General Motors and Ford. This is
the cost of some contracts it offers. Nevertheless, by
obviously impractical, since it will
doing so, it will share the market at a cheaper price
be difficult for the new firm to
and earn less profit, while providing little incentive for
compete with existing companies
either of these companies to deviate.
such as General Motors and Ford.
http://neumann.hec.ca/pages/francois.leroux/exercices http://people.tamu.edu/~aglass/econ
/Exercise%2024%20Sweezy.pdf 323/Chapter13Slides.pdf
Lastly, the fourth model of oligopoly
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07 MAY 2021 / / FRIDAY / / FINALS 1ST ACTIVITY OLIGOPOLY
The second model of oligopoly was Cournot model, was Bertrand Model, in which each
Cournot's oligopoly model is one of the oldest theories company has decided its rates
of individual firm behavior and is related to non- independently,assum using the

To summarize, the collusive oligopoly. According to the Cournot model,
an oligopolistic believes that his opponent will
models I have
maintain his productivity regardless of what he does.
mentioned, the An example of a firm under this model are HMV and
Cournot model Virgin (Music Retailing). For instance, if HMV and
seems to be Virgin were struggling to sell the same album in the
assumption that their competitors
will continue charging. Also, in this
model in which firm conditions
where there is price-setting and
market elasticity, some of demand.
For instance, Tesco, Wal Mart,

impractical, and the
Bertrand and
Stackelberg both
seem to be deeper
music industry. HMV would select a price defendant
based on Virgin's production, and Virgin would do the
same based on HMV's output.
https://saylordotorg.github.io/text_introduction-to-
economic-analysis/s18-01-cournot-oligopoly.html
Sainsbury, and Morrison
(Supermarket industry) set their rates
for milk, consumers can purchase
milk from the supermarket with the
lowest price, while the other

and more profound supermarket will set its own price

assuming the competitor's price is
in understanding of
unchanged. If all milk prices in all
oligopoly. supermarkets are equivalent, demand
is divided between customers, and
all benefit equally.
http://people.tamu.edu/~aglass/econ
323/Chapter13Slides.pdf

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KEYWORDS

Oligopoly is an imperfect monopoly. Like

the despotism of the Dual Monarchy, it is
saved only by its incompetence.
-John Kenneth Galbraith

FIRM UNDER THE MODELS OF OLIGOPOLY

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