Posted by Susan on Tuesday, May 26, 2009 at 7:39pm.
in 1) I would add the word "dominant" after the word large.
in 3) practically all goods in all markets except monopolies are differentiated or homogeneous. For a third condition of a oligopolistic market, I would add "firms tend to collude.
In part 2, How do oligopolies determine price. There are a number of explanations, and it depends on whether the goods are homogeneous or not. First, is that the firms overtly or covertly collude and set prices. Then, there is the dominant firm model, which says the dominant firm sets the price and the other firms fall in line. There is the Cournot model which suggest each firm tries to estimate what the other firms will do, and then based on this finding, the firm produces to maximize its own profits.
for mor info start here: http://en.wikipedia.org/wiki/Oligopoly
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