If a firm reacts to other firms' market decisions by anticipating how the others will then react, this reflects
A) the behavior of followers of a price leader
B) the behavior associated with price leadership
C) a market with a low concentration ratio
D) mutual interdependence
E) collusion by definition

Question

Quizplus · Accepted Answer

Mutual interdependence occurs when firms in an oligopoly market anticipate the reactions of their competitors to their own actions, such as changes in price, product offerings, or marketing strategies. This anticipation influences their strategic decisions, as they understand that their actions will affect the market and elicit responses from their competitors.

If a Firm Reacts to Other Firms' Market Decisions by Anticipating