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Suppose a single firm (the leader) chooses output before all other firms (the followers). If the followers accept the leader's output and maximize profits based on the leader's given level of output, then this industry is characterized as an oligopoly.
An oligopoly is a marketplace structure in which a marketplace or enterprise is ruled by way of a small number of huge dealers or producers. Oligopolies frequently end result from the preference to maximize profits, leading to collusion among groups. This reduces opposition, mainly to higher fees for purchasers and lower wages for personnel.
Many industries have been referred to as oligopolistic, inclusive of civil aviation, energy carriers, the telecommunications region, Rail freight markets, meals processing, funeral offerings, sugar refining, beer making [citation needed], pulp and paper making, and car manufacturing.
Maximum nations have laws outlawing anti-competitive behavior. European opposition regulation prohibits anti-aggressive practices which include rate-fixing and manipulating marketplace delivery and trade among competitors. in the US, the United States Department of Justice Antitrust Division and the Federal Trade fee is tasked with stopping collusion. however, groups can steer clear of criminal outcomes via tacit collusion, as collusion can simplest be tested thru real and direct communique between companies.
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