Oligopoly pricing differs from pricing in other market structures. The essential difference is
A) relatively high fixed costs associated with oligopoly
B) brand loyalty of consumers
C) use and effect of advertising
D) difference between concentration ratios and HHI
E) mutual interdependence of firms

Question

Quizplus · Accepted Answer

In an oligopoly, firms are mutually interdependent, meaning the actions of one firm (such as changes in price, output, or product features) can significantly impact the profits of other firms within the market. This interdependence requires firms to consider the potential reactions of their competitors when making decisions, distinguishing oligopoly pricing from pricing in other market structures where such interdependence is not as pronounced.

Oligopoly Pricing Differs from Pricing in Other Market Structures