Point out an item that a person purchases regularly from a firm that functions in an oligopolistic industry. Why do both the item and firm fit the model of oligopoly. Relate it to television advertisements or paper printed advertisements that you have seen from this type of industry.
What is the interdependence that you have noticed between the firm you chose and it’s rivals regarding of product differentiation, price leadership or price competition?
Gas industry is an oligopolistic industry, because there are few gas suppliers, and they have created a barrier to entry, both legally and with deep pockets, all gas suppliers are inter-dependent, i.e., if any firm reduce the price, the others have to reduce in order to stay in the market, and the advertising is important for product differenciation.
In the TV or paper advertisements, we tend to notice the various products being offered by these suppliers in addition to new offers and coupons, so as to attract the customer, because the interdependence is mainly on product differentiation. They have to keep the prices same. Thus, price war is also prevalent.
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