If one firm in an oligopolistic industry cuts prices,its competitors:
A)will make profits.
B)will also respond with similar price cuts.
C)will correspondingly raise prices.
D)will fill the gap by capturing market share.

Question

Quizplus · Accepted Answer

A critical competitive feature of oligopolistic industries is interdependence of the major players: What one firm does can have an immediate impact on the major competitors,forcing a response in kind.By cutting prices,one firm in an oligopoly can take market share away from its competitors,forcing them to respond with similar price cuts to retain their market share.

If One Firm in an Oligopolistic Industry Cuts Prices,its Competitors