In the previous Learning Path on oligopolies we learned what they are and what kinds of oligopolies exist. In this LP, we’ll learn about how oligopolists can collude in order to maximise their profits, even though this agreement will not likely last. Also, we’ll see what entry and exit barriers are, and how they affect the number of oligopolists in the market. Finally, we’ll also learn about contestable markets, which mean competitive results can also be reached in oligopolistic markets.
More precisely, in this LP we’ll learn about:
Collusion, when two or more competitors agree to cooperate;
Folk theorem, indicates how likely the collusion is to last;
Repeated games, which analyses for how long it will last.
Contestable market, which explains why even oligopolies can reach perfect competition results.