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/knowledg
e/economics/oligopolistic-market-oligopoly/

OLIGOPOLY: A market form in which a market is dominated by a small number of sellers.

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.
Models of Oligopoly
DEFINITION & EXAMPLE OF MODELS OF
OLIGOPOLY
The first model of oligopoly is Sweezy model, or
kinked demand model, where it demonstrates that
price stability can occur in an oligopoly without
collusion. Two businesses "disagree" over a sector.
Observers also noted that if one firm's price was
raised, the other firm's price remained unchanged. An
example of a firm under this model is T-Mobile, O2,
Vodafone, & Orange (Mobile Phone Networks). For
instance, as T-Mobile chooses to raise its prices, its
rivals such as O2, Orange, and Vodafone will remain
unresponsive. However, if T-Mobile were to reduce
the cost of some contracts it offers. Nevertheless, by
doing so, it will share the market at a cheaper price
and earn less profit, while providing little incentive for
either of these companies to deviate.

http://neumann.hec.ca/pages/francois.leroux/exercices/
Exercise%2024%20Sweezy.pdf

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07 MAY 2021 / / FRIDAY / / FINALS 1ST ACTIVITY OLIGOPOLY
The second model of oligopoly was Cournot model,
Cournot's oligopoly model is one of the oldest theories
of individual firm behavior and is related to non-
collusive oligopoly. According to the Cournot model,
an oligopolist believes that his opponent will
maintain his productivity regardless of what he does.
An example of a firm under this model is HMV and
Virgin (Music Retailing). For instance, if HMV and
Virgin were struggling to sell the same album in the
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

KEYWORDS

FIRM UNDER THE MODELS OF OLIGOPOLY

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