Question

6. Oligopolies

This chapter discusses companies that are oligopolists in the market for the goods they sell. Many of the same ideas apply to companies that are oligopolists in the market for the inputs they buy. If sellers who are oligopolists try to increase the price of goods they sell, the goal of buyers who are oligopolists is to try to decrease the prices of goods they buy.

Major league baseball team owners have an oligopoly in the market for baseball players.

The owners' goal is to keep players' salarieslow   .

Points:

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True or False: This goal is difficult to achieve because baseball players demand more money.

True

False

Points:

1 / 1

The owners of baseball teams would like to keep players' salaries low. This goal is difficult to achieve because each team has an incentive to cheat on any agreement because it will be able to attract better players by offering higher salaries. See Section: Competition, Monopolies, and Cartels.

Baseball players went on strike in 1994 because they would not accept the salary cap that the owners wanted to impose.

True or False: The owners felt the need for a salary cap to dissolve collusive behavior over salaries.

True

False