Diagrams for different types of oligopoly
I know for a collusive oligopoly you would represent it with a monopoly diagram but what diagram best represents a competitive, non-collusive one? In terms of analysis, you evaluate them with the same pros and cons as for perfect competition but surely this diagram is quite a poor representation of the sector? Would you be better using the contestable markets diagram? Some people say the kinked demand curve model can be used but this isn't really useful to evaluate the pros and cons of competitive oligopolies, it only shows the interdependence and uncertainty.
Another thing, the pros of competitive oligopolies are the cons of collusive ones and vice versa so in an exam question where you were asked to evaluate whether oligopoly in an industry is good, is it best to determine which type of oligopoly it is and then say the pros and cons of this type of oligopoly? For example if given supermarkets, you'd probably pick that they seem to be tacitly collusive and go with pros and cons of monopoly to form your argument. Or is it better to do the essay as pros if competitive, cons if collusive?
Apologies for the long question, can anyone help?
Another thing, the pros of competitive oligopolies are the cons of collusive ones and vice versa so in an exam question where you were asked to evaluate whether oligopoly in an industry is good, is it best to determine which type of oligopoly it is and then say the pros and cons of this type of oligopoly? For example if given supermarkets, you'd probably pick that they seem to be tacitly collusive and go with pros and cons of monopoly to form your argument. Or is it better to do the essay as pros if competitive, cons if collusive?
Apologies for the long question, can anyone help?
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