oligopoly- collude of compete?

• Competitive oligopolies may engage in price wars or compete on non-price factors.
• Tacit collusion involves formal agreements to fix prices or quantities.

  False
• What are the two types of oligopolies based on their behavior?

  Competitive and collusive
• What type of agreement involves informal coordination among firms without explicit contracts?

  Tacit collusion
• Order the factors that promote competitive oligopoly from most to least significant.

  1️⃣ Lots of firms

  2️⃣ Low barriers to entry

  3️⃣ One firm with significant cost advantage

  4️⃣ Homogeneous goods

  5️⃣ Saturated market
• In price leadership, smaller firms follow the pricing decisions of a dominant company.
• High barriers to entry promote collusive oligopoly by preventing new firms from entering the market.
• Consumer inertia refers to consumers being unwilling to switch suppliers.
• Consumer inertia can weaken the incentive for firms to cheat on collusive agreements.
• Competitive oligopolies lose the economies of scale and dynamic efficiency benefits.
• What are the benefits of competitive oligopoly in terms of static efficiency?

  Allocative, productive, and X efficiency
• Collusive oligopolies behave like monopolies, leading to static inefficiencies.
• What type of profits do collusive oligopolies aim to achieve?

  Supernormal profits
• Collusive oligopolies may suffer from diseconomies of scale.
• Dynamic efficiency gains are one of the benefits of collusive oligopolies.