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Wal mart and Amazon are now matching each other’s prices. This is a classic example of...

Wal mart and Amazon are now matching each other’s prices. This is a classic example of their market structure which is

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  • This is a classic example of their market structure which is an oligopoly.
  • Walmart and amazon are oligopolies as they belong to the oligopoly market structure with few other dominant entities.
  • These dominant entities use various tactics like price matching, price collusion etc.
  • If any of the firms in this market structure raises their price and if other firms keep their price constant, they will loose their market share and will experience fall in total revenue.
  • Hence to maintain their share equally in the oligopoly market, each firms in this market structure matches their prices with each other to remain dominant.
  • It is assumed that if any firms in this market structure cut their price's then other firms also match these price cuts to avoid loosing customers.
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