Does the shut down run rule apply to oligopolies in the same way as it does to perfectly competitive companies for both the short run and the long run?

I can find discussions of the "shut down rule" but none of the "shut down run rule" on the internet, using Google.

If you are referring to the "shut down rule", the answer is No.

Different rules apply with oligopolies

sorry - yes, I meant shut down rule - how is the shut down rule different for oligopolies than for a perfectly competitive company?

I am referring this question to our expert on that subject. I could only give you a web site reference using Google.

To determine if the shutdown rule applies to oligopolies in the same way as it does to perfectly competitive companies in the short run and long run, let's first understand what the shutdown rule is.

The shutdown rule is a concept in economics that guides firms in deciding whether to temporarily halt operations or "shut down" in the face of economic losses. According to the shutdown rule, a perfectly competitive firm should shut down in the short run if the price of the good or service it produces falls below its minimum average variable cost (AVC). This implies that the firm cannot cover its variable costs and would incur greater losses by continuing to produce.

Now, in the short run, oligopolies, which are markets with a small number of dominant firms, may also consider the shutdown decision. However, the presence of market power and strategic interactions among oligopolistic firms can complicate the analysis compared to perfectly competitive markets.

In an oligopoly, a firm's decision to shut down would depend on various factors such as the behavior of other firms in the market, demand conditions, and the firm's strategic objectives. For example, if an oligopolistic firm expects other firms to continue producing despite losses, it may choose to withstand short-run losses to maintain market share or deter new entrants. The decision to shut down in the short run for oligopolies is typically influenced by strategic considerations beyond just costs.

In the long run, both perfectly competitive firms and oligopolies have more flexibility. Perfectly competitive firms can exit the market altogether if they consistently experience losses in the long run. Similarly, in the long run, an oligopolistic firm may choose to exit the market, merge with competitors, or change its strategy to improve profitability.

However, it's important to note that the behavior of oligopolies in the long run can be affected by barriers to entry, economies of scale, and the firm's market power. Oligopolistic firms may have more options and strategic maneuverability, making their response to losses more complex compared to perfectly competitive firms.

Therefore, while the concept of the shutdown rule can be used as a basic guideline for both perfectly competitive firms and oligopolies, the decision-making process and outcomes for oligopolies in the short run and long run are influenced by additional factors related to market structure and strategic interactions.