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You
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#1
Report Thread starter 14 years ago
#1
1.Explain how, when setting prices and choosing levels of output, oligopolists are affected by the interdependence of firms in the market.

2.Evaluate the view that oligopolists should be allowed to collude or co-operate, for example by fixing prices or by undertaking joint research and product development.

How would you answer it?
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topdude
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#2
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(Original post by You)
1.Explain how, when setting prices and choosing levels of output, oligopolists are affected by the interdependence of firms in the market.

2.Evaluate the view that oligopolists should be allowed to collude or co-operate, for example by fixing prices or by undertaking joint research and product development.

How would you answer it?
1. draw kinked demand curve and explain it. just shopw why its dangerous 2 change prices, as if they increase they will lose revenue and if they decrease they will lose revenue

2. show that it can reuce consumer surplus., and make them less efficient. u can also argue that it could be in the customers intrest as well thou if it leads to innovation and better products, esp if pharmacetucal (cant spell) companies do it.
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Splinter
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+ Remember game theory. Very important. Also, formation of cartels. Cooperation of oligopolists can result in reduced competition, as said by topdude, this less consumer surplus and consumers lose out.
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Noel
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#4
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Thats one of AQA's past paper questions!

Use the linkhttp://www.aqa.org.uk/qual/gceasa/qp-ms/AQA-ECN5-W-MS-Jan03.pdf
The answer is on the 8th page!
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You
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#5
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Thanks, but could you tell me what you would write for question 1? (in more details please). I seriously don't know what I should write even after reading the MS!
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You
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#6
Report Thread starter 14 years ago
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So what are the ad/-disadvantages of cooperation/collusion>
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