ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Oligopolies are mutually interdependent. This means that the actions of one oligopolistic firm affect other firms in the market. The action of one firm might benefit the other firms. So, the price and quantity decisions of one firm are affected by all other firms in the market.

Detailed explanation-2: -Group Behaviour: Under oligopoly, there is complete interdependence among different firms. So, price and output decisions of a particular firm directly influence the competing firms. Instead of independent price and output strategy, oligopoly firms prefer group decisions that will protect the interest of all the firms.

Detailed explanation-3: -Their interdependence means that they are also likely to change their prices according to their competitors. For example, if Coca-Cola changes its price, Pepsi is also likely to do the same. Oligopolies exist worldwide and may, in fact, be increasing in prevalence over time.

Detailed explanation-4: -The distinctive feature of an oligopoly is interdependence. Oligopolies are typically composed of a few large firms. Each firm is so large that its actions affect market conditions. Therefore, the competing firms will be aware of a firm’s market actions and will respond appropriately.