Oligopoly (Economics) 1) Main assumptions of Oligopoly 2) Price stability in Oligopoly.

1) Oligopoly is when a particular merchandise is controlled by a misdirect group of firms. For eccentric supermarkets, thither be deuce-ace (there commonly exist three companies) companies which overtop the market, Wong and Metro, Santa Isabel and Plaza Vea, and Tottus.

The main assumptions that economists cave in when talking about a situation of Oligopoly atomic second 18 assorted; three or four heavy(a) companies dominate the industry, however keen companies do exist (smaller companies in the recent example would be for example Arakaki, a sole trader company); firms ar interdependent, al go out watch what the competitors do and act wherefore (when Wong created the grant card, it did not even passed a week when Santa Isabel created the Más Más card); the humanity of the kinked demand curl (which we will see what it is on fountainhead b); there are barriers to entry, this way it is difficult for other firms to introduce the industry; non put down competition, as companies cannot contest by prices, thence they have to compete with the helping they offer (for example the gift and the Más Más cards); the oligopoly must be collusive (collusion), this means when the companies, which dominate, perish together to asseverate really advanceder(prenominal) prices at the expense of the consumer (for example Umbro and Adidas, sell football shirts at very high prices, as a Manchester united shirt be roughly $50), companies which work together to maintain high prices should be fined, as it is illegal. Advertising is to a fault subjective to maintain a high profit and market share, and also something very important, which is to bourgeon flaw loyalty (for example, once I began to buy Sony electro domestics, I set forth to have a shuffling loyalty, as I never had a single trouble with them). 2) The causes of price constancy (when prices are stable, If you want to get a full essay, come in it on our website: Orderessay

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