One reason an oligopolistic firm may have market power is that

Question

Quizplus · Accepted Answer

An oligopolistic firm may have market power if it produces a significant fraction of total industry output, as this gives it leverage over prices and the ability to influence the market. This is often the case in industries with just a few dominant players. While oligopolistic firms may not always make positive profits, they can still have market power due to their control over supply and demand. Contestability refers to the ease with which new firms can enter an industry, and dis-economies of scale refer to the increased costs that may arise as a firm grows larger. The presence of many similar producers may actually decrease an oligopolistic firm's market power, as it faces more competition.

One Reason an Oligopolistic Firm May Have Market Power Is