Respuesta :
The firms always match other cartel firms' price cuts but don't match price increases.
Why Do Oligopolies Exist?
A market structure known as an oligopoly consists of a limited number of businesses, none of which can prevent the others from exerting significant influence. The concentration ratio calculates the largest companies' percentage of the market.
A market with a monopoly has just one producer; one with a duopoly, two; and one with an oligopoly, three or more. An oligopoly can have as many firms as it wants, but the number must be so low that each firm's decisions have a big impact on the others.
Why Do Oligopolies Remain Stable?
The reason that such a group is stable is an intriguing question. Businesses must recognize the advantages of cooperation over economic competition in order to decide to forego competitiveness and instead focus on the advantages of cooperation.
The companies have occasionally come up with inventive strategies to prevent the appearance of price fixing, such as utilizing moon phases. Setting prices rather than allowing the free market to decide them is known as price-fixing. Another strategy is having companies follow a known pricing leader; when the leader raises prices, the others will do the same.
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