Respuesta :
It must decrease its price in order to sell more market power that has saturated the market wants to increase sales
What is oligopoly ?
An oligopoly is a market structure in the economy. The structure only has a small number of firms. Of these firms, none are a firm forerunner. This means that no single firm has more influence than any of the others on the market. The resulting power structure means that there are no advantages present, as well.
Some market structures that may seem more familiar are monopolies and duopolies. In monopolies, a single firm has what’s called monopolistic competition. This means that they are the only firm in the market, and that they are controlling it. This means that they control the entire market, and the barrier to entry prevents other firms from participating. A monopoly quantity, as the name implies, is singular.
Why does oligopoly stay stable ?
For an oligopoly to remain stable, competing companies have to see the benefit in cooperation. By collaborating, large companies in a market can increase their profits. As such, many companies tend to be more willing to cooperate with one another.
That may sound like price-fixing, though, right? Many companies will avoid blatant price-fixing through creative means. Historically, some have fluctuated their prices by following the phases of the moon. Others work together to define a price leader. Then, when the leader raises prices, all of the “competing” companies will follow their lead. This lets oligopolies avoid unethical practices such as price-fixing on paper, at the very least.
Learn more about oligopoly market :
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