219 Reading: Oligopoly Models

Oligopoly Models

There is no generally accepted model of oligopoly, but rather there are a number of models that will be touched on in the following sections. In principle, one can calculate and graph an oligopoly’s cost and revenue curves, and determine its profit maximizing level of output and price in the same way as we did with monopoly. What complicates matters with oligopolistic industries is that any one firm’s demand and marginal revenue curves are influenced by what the other oligopolistic firms are doing. For example, if Pepsi goes on sale, the demand for Coca-Cola declines, with the demand and marginal revenue curves shifting to the left. Thus, the best price and quantity for any oligopoly depends on what every other firm in the industry is doing.

Self Check: Introduction to Oligopolies

Answer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times.

You’ll have more success on the Self Check if you’ve completed the four Readings in this section.

Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.