Explain five features of oligopoly. (10mks)

  • Interdependent in decision making to avoid counter reactions from other firms.
  • Deal in similar commodities which have been differentiated through colour, packing , pricing.
  • Engage in non-price competition through aggressive advertising market segmentation, after sale services etc.
  • Few-large firms which control substantial share of the market.
  • Engage in price rivalry/competition which may lead to survival or collapse of firms.
  • Price rigidity due to fear of selling above or below kinked demand curve.
  • Price leadership where the dominant firm dictates market price which rules the market.
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