Write the two different ways in which an oligopoly firm may behave.

1.	Write the two different ways in which an oligopoly firm may behave.
Answer» FOLLOWING are the three DIFFERENT ways in which oligopoly firms may behave: (i) Firms may collude together and decide not to compete with each other and maximise total profits, as in COLLUSIVE oligopoly. (ii) Under non-collusive oligopoly, firms decide not to collude and HENCE decide to compete with each other through non-price competition. (iii) Firms may produce differentiated PRODUCTS, having their own distinguishing characteristics, as in imperfect oligopoly.

Answer»

FOLLOWING are the three DIFFERENT ways in which oligopoly firms may behave:

(i) Firms may collude together and decide not to compete with each other and maximise total profits, as in COLLUSIVE oligopoly.

(ii) Under non-collusive oligopoly, firms decide not to collude and HENCE decide to compete with each other through non-price competition.

(iii) Firms may produce differentiated PRODUCTS, having their own distinguishing characteristics, as in imperfect oligopoly.

Discussion