Explain the implications of the following :Non-price competition under

1.	Explain the implications of the following :Non-price competition under oligopoly
Answer» Non-price competition under oligopoly: When there are only a few firms they are normally afraid of competing with each other by lowering the price. It may start a price war and firm who starts the price war may ultimately lose. Thus, firms indulge in nonprice competition in order to increase their shares in sales and profit. Under non-price competition, they mainly utilise publicity and selling techniques for increasing the sales of their product. Firms under oligopoly follow the policy of rigidity. Price rigidity refers to a situation in which price tends to stay fixed irrespective of changes in demand and supply conditions.

Explain the implications of the following :Non-price competition under oligopoly

Answer»

Non-price competition under oligopoly: When there are only a few firms they are normally afraid of competing with each other by lowering the price. It may start a price war and firm who starts the price war may ultimately lose. Thus, firms indulge in nonprice competition in order to increase their shares in sales and profit. Under non-price competition, they mainly utilise publicity and selling techniques for increasing the sales of their product.

Firms under oligopoly follow the policy of rigidity. Price rigidity refers to a situation in which price tends to stay fixed irrespective of changes in demand and supply conditions.

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