ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An oligopoly is when a few companies exert significant control over a given market. Together, these companies may control prices by colluding with each other, ultimately providing uncompetitive prices in the market.

Detailed explanation-2: -The collusive model is prevalent in oligopoly markets, where a group of market leaders colludes to set prices for products or services. Smaller firms must adjust their prices to match those of the large firms. Collusive models are considered illegal if their purpose is to defraud the public.

Detailed explanation-3: -In an oligopoly, a few sellers supply a sizable portion of products in the market. They exert some control over price, but because their products are similar, when one company lowers prices, the others follow. In a monopoly, there is only one seller in the market.

Detailed explanation-4: -Price Leadership Example The airline industry has usually had an oligopolistic market structure since there are high barriers to entry due to the high costs of the industry. In the airline industry, the leading firm that has a significant market share usually sets the price in the market using its market power.

Detailed explanation-5: -Under oligopoly price and output can also be determined without any collusion among the firms. The firms may decide to follow a firm in price and output determination in the long run. Such sort of policy is called price leadership under oligopoly.