Question

Oligopoly: 1- Give an example of an oligopoly producing homogenous products--- 2- Define a horizontal merger and give an example----------- -------------- 3- Define a vertical merger and give an example by listing the different stages of operation------ 4- If an individual oligopolist increases the price of the item they are selling will they want the other oligopolist to increase their price?-------------- Yes or No 5- Why would he want the other oligopolists to react that way (as your pick in question 4)----------- 6- If the oligopolist increases his price will the other follow? Yes or No 7- Why will the others act the way you answered (Yes or No) in question 6?--------- 8- If the oligopolist lowers his price, will he want the others to follow? Yes or No 9- Why would he want the others to take the action you picked in #8? 10- Will the other oligopolists follow the price decrease? Yes or No 11 - How come they will act the way you picked in #10? -----
only need 6-11. thank you

Answer 1

6) No

7) If the oligopolist increases his prices others will not follow because firms in oligopoly follow price cuts by a rival but not price increases.

8) No

9) If the oligopolist lowers his price, he won't want the others to follow because if the rivals will react then the firm lowering the price first cannot gain from the price cut.

10) Yes

11) The other oligopolists will follow the price decrease in order to bring it at par with the price reduction of the firm.