Unlike other market structures, Oligopoly is a market structure existing of few firms who have the large majority of market share. Because each firm has a sizable part of the market, key characteristics of oligopolistic firms is the existence of mutual interdependent and repeated interaction of the firms as stated by economist Eric Nilsson (2007). Mutual interdependence exists when two or more firms depend on one another. The actions of one firm will strategically affect the actions of another. Repeated interactions occur in an Oligopoly market because firms select a strategy, observe the outcome of the trial then play the game again and again, as long as rivals exist. Because most firms in an oligopoly market have been in the same industry for some time, they are familiar with one another and work together to have extensive entry barriers. The high barriers to entry allow oligopolistic firms to attain and retain greater market control. Restricting competition in an oligopolistic market allows the existing firms to be price makers, who produce strategically when making decisions on both price and non price competition such as advertising expenditures, product development, production, process improvements and plant size (Asarta, 2016). Oligopolistic market structure is unique in the way it can produce standardized products similar to perfect competition or differentiated products, similar to a monopolistic competition market structure. What sets Oligopoly apart from other market structures is that the top firms in a given industry produce half of the market’s total output, if not more. Throughout this paper, we will further discuss the Oligopoly market, uncover our implemented strategies and recognize the use of micro...
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...atisfying consumer’s demand.
All in all, Firm 3 beat us in first quarter due to their reduced price, increased advertising expenditures, and increased sales which were all aligned with the market demand. Because this was our first decision in the market, we made educated guessed since it was difficult to decipher what the rivalry firms would do to price and nonprice competition such as production, product development, plant expansion, advertising, and process improvement (Thomas and Maurice, 2007). Although we didn’t succeed over firm 3 in quarter one, we did however come in second place with a net profit of $169,849. Our executed outcome was not a surprise considering this was our first decision and we had the inability to predict with certainty the actions of our rivals to estimate the marginal revenue and demand. We now move to quarter two with lessons learned.
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