Oligopoly is
A) always efficient.
B) efficient only if the firms cooperate.
C) efficient only if the firms play non-repeated games.
D) generally not efficient.
E) efficient only if the firms innovate.

Question

Quizplus · Accepted Answer

Oligopoly is generally not efficient. This is because the firms in an oligopoly have significant market power and can influence prices, which can result in higher prices and lower quantities compared to perfect competition. Additionally, oligopolistic firms may engage in non-price competition, such as advertising and product differentiation, which can be socially wasteful.

Oligopoly Is