Explain the 'interdependence between firms' characteristic of oligopoly market. OR What difference does it make to the market when we say that firms are interdependent in oligopoly? Explain

Explain the 'interdependence between firms' characteristic of oligopol

1.	Explain the 'interdependence between firms' characteristic of oligopoly market. OR What difference does it make to the market when we say that firms are interdependent in oligopoly? Explain
Answer» Solution :Firms under oligopoly are interdependent. Interdependence means that actions of one firm AFFECT the actions of other firms. A firm considers the action and REACTION of the RIVAL firms while determining its price and output LEVELS. A CHANGE in output or price by one firm evokes reaction from other firms operating in the market.