Question

Compare and contrast P and Q determination in a strategic situation like an oligopoly and that in a purely competitive situation. Give examples for each type of scenarios.

Answer 1

Purely competitive market is considered as most efficient. It produces higher output at lower price.

While the oligopoly market is characterized by the few dominant firms and output and price might deviate that from the competitive output and price.

From the social point of view, the perfectly competitive market is most desirable form of market.

The agricultural sector exhibits the features of perfectly competitive market whilst the telecom sector resembles the oligopoly market.