a2 economics

ThugzMansion7

9

"how are competive firms interdependent"
i can't answer this? anyobdy know (briefly)

Reply 1

Slice'N'Dice

2

ThugzMansion7

"how are competive firms interdependent"
i can't answer this? anyobdy know (briefly)

An oligopoly is a market dominated by a few large suppliers. The degree of market concentration is very high (i.e. a large percentage of the market is taken up by the leading firms). Firms within an oligopoly produce branded products (advertising and marketing is an important feature of competition within such markets) and there are also barriers to entry.

The barriers may take on a number of forms, depending upon the nature of the industry; this allows firms to make abnormal profits in the long run.

Interdependence between firms means that each firm must take into account the likely reactions of other firms in the market when making pricing and investment decisions. This creates uncertainty in such markets.

Reply 2

pedy1986

13

ThugzMansion7

"how are competive firms interdependent"
i can't answer this? anyobdy know (briefly)

Game Theory / Kinked Demand curve

Reply 3

Slice'N'Dice

2

Slice'N'Dice

Interdependence between firms means that each firm must take into account the likely reactions of other firms in the market when making pricing and investment decisions. This creates uncertainty in such markets.

...which can be shown through the use of Game Theory. As corey has stated.

Reply 4

ThugzMansion7

OP

9

corey

Game Theory / Kinked Demand curve

hi,
in my mark scheme it says
"for explaining how competitive oligopolists are interdependent, e.g. needing to anticipate their rivals' reactions."

ive already mentioned what an oligopoly is and what is it about the kinked demand curve and game theory that ive got to write.
can someone provide a brief structure. btw its worth 2 marks

Reply 5

Jessie

9

this is a2 economics - is game theory expressly on the syllabus with simultaneous and sequential moves? because it would be difficult to answer the question in the way that has been suggested without talking about bertrand and cournot - price and quantity competition. and that, im sure, is 1st year degree level.

Reply 6

ThugzMansion7

OP

9

Jessie

this is a2 economics - is game theory expressly on the syllabus with simultaneous and sequential moves? because it would be difficult to answer the question in the way that has been suggested without talking about bertrand and cournot - price and quantity competition. and that, im sure, is 1st year degree level.

the original question was:

Explain how firms in oligopolistic markets are affected by interdependence and uncertainty.(15marks)

a2 economics

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