Non Collusive Oligopoly Diagram. A vigorous price competition may result in uncertainty. Equilibrium under independent action.
If the firm s rivals will ignore any price increase but match any price reduction the firm s marginal revenue curve will be moving from left to right mr1bmr1. There are two types of oligopoly collusive and non collusive in a collusive oligopoly the firms may collude together and decide not to compete with each other and maximise total profits of the two firms together. In such a case the two firms would behave like a single monopoly firm.
Non collusive oligopoly diagram a loss can also be made this all depends on where the ac and ar curve is positioned.
They will then set quotas to keep output at the profit maximising level. Non collusive oligopoly model sweezy s model presented in the earlier section is based on the assumption that oligopoly firms act independently even though firms are interdependent in the market. Suppose chamberlin s model of oligopoly consisting of an small group of firms and sweezy s kinked demand curve models are regarded as most important models of this category. Examples of markets that can be described as oligopolies include the markets for petrol in the uk soft drinks producers and the major high street banks.
