Oligopoly

Oligopoly is a a market structure with several _________ sellers.

A market structure with only two sellers is called a _______.

dominating

duopoly

MARKET

sellers

sellers

Features

Several

Oligopoly

______ dominant sellers.

Sellers are interdependent.

Oligopolists sell heterogeneous or homogeneous goods.

Entry is _________________.

________ information of the market.

restricted or difficult

Imperfect

Oligopolists are ____________. If one firm lowers the price, others will follow.

Firms can influence ______.

They have to search for a price which maximises their ______.

Behaviour of firms

prices

1. Oligopolists are price searchers

profits

Oligopoly

2. The possibility of price war

interdependent

price warsSo _________ may break out and some firms may go out of business.

In some oligopolistic markets, dominant sellers may act as ______ in initiating ____________.

Behaviour of firms

Oligopoly

3. Price leadership

leaders price changessmaller firmsThe ___________ will then follow.

price price

$

$

Behaviour of firms

Oligopoly

Firms often engage in __________________ .

4. Non-price competition

non-price competition

Example

Lucky draws organised by supermarkets.

Monopolistic competition is a market structure with the features of both ________________ and _________.

Monopolistic Competition

perfect competition monopoly

Features similar to perfect competition

Features similar to monopoly

A large number of _____ and ______

sellersbuyers

____ entry and exitFree

____________ goodsHeterogeneous

Perfect / Imperfect information of the market

As the firms sell differentiated products, they can influence the __________ of the good. They have to find the price which maximises their ______.

searchers

market priceprofits

Behaviour of firms

Monopolistic Competition

Monopolistic competitors are price ________.

_________ competitionNon-price

Quiz OneIdentify the market structure of the International Direct Dialing (IDD) services in Hong Kong.

The market is dominated by several major seller like:

Oligopoly

PCCW

Hutchison Global Crossing

New World TelephoneNew T&T

Quiz TwoSuppose the costs of providing IDD services are lower due to technological progress. If PCCW lowers its price, what will be the actions of other IDD service providers?

Other firms will _____ their prices when PCCW lowers its prices.

Since the market structure of IDD services is an oligopoly, the decisions made by firms will be _______________.interdependen

tlower

Quiz ThreeWhat is the market structure of newspaper stalls in Hong Kong? Explain.

It is _______________________ as the features of both ___________________ and _________ are present:

monopolistic competitionperfect competition monopol

y______ number of groceries in Hong Kong

entry into the market is _____ as only a small amount of capital is required

goods sold in different groceries are regarded as ______________ by consumers __________ information of the

market

largeeasy

heterogeneous

imperfect

End