Question 6 How does oligopoly differ from monopolistic competition? Question 7 W

Question

Question 6 How does oligopoly differ from monopolistic competition? Question 7 What factors have resulted in many industries being dominated by a small number of large firms? Question 8 Based on the discussion in Box 8.4 (page 188), set up a prisoner's dilemma type matrix o illustrate a situation in which two firms' profits are determined by their advertising expenditure. Work on the assumption that: (a) if neither firm advertises they will both enjoy medium level profits (payoffs); (b) if one firm advertises and the other does not, the overall payoff for the former (in terms of profits) will be high while the payoff for the latter will be zero; (c) if both firms choose to advertise they ill both end up in an advertising war after which they both earn low pay-offs.

Explanation / Answer

Q.6

Following are the main points of difference between an oligopolistic competition and monopolistic competition:

1) In an oligopoly, there are a small number of large firms. In monopolistic competition, there are a large number of small firms.

2) There is a high level of entry barrier in an oligopolistic market. The barrier to entry is low in the monopolistic market.

3) Firms in an oligopoly have a higher market power than firms in a monopolistic competition.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.