Distinguish between perfect oligopoly and imperfect oligopoly. Also ex

1.	Distinguish between perfect oligopoly and imperfect oligopoly. Also explain the "interdependence between the firms" feature of oligopoly
Answer» Difference between Perfect Oligopoly and Imperfect Oligopoly: Perfect Oligopoly: Form of oligopoly in which each firm produces a homogeneous product is known as a perfect oligopoly. Imperfect Oligopoly: Form of oligopoly in which each firm produces a differentiated product is known as an imperfect oligopoly. Feature of "interdependence between the firms" feature of oligopoly: There exists a very high degree of mutual interdependence between the firm in an oligopoly market. The price and the quality decision of a particular firm are dependent on the price and the quality decisions of the rival (other) firm. Hence, a firm must take into consideration the problem of rival reactions, while formulating its own price and output decisions.

Distinguish between perfect oligopoly and imperfect oligopoly. Also explain the "interdependence between the firms" feature of oligopoly

Answer»

Difference between Perfect Oligopoly and Imperfect Oligopoly:

Perfect Oligopoly: Form of oligopoly in which each firm produces a homogeneous product is known as a perfect oligopoly. Imperfect Oligopoly: Form of oligopoly in which each firm produces a differentiated product is known as an imperfect oligopoly. Feature of "interdependence between the firms" feature of oligopoly: There exists a very high degree of mutual interdependence between the firm in an oligopoly market. The price and the quality decision of a particular firm are dependent on the price and the quality decisions of the rival (other) firm. Hence, a firm must take into consideration the problem of rival reactions, while formulating its own price and output decisions.

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