Oligopoly and strategic behavior

This chapter begins by describing the characteristics of oligopolistic industries. It explains the key characteristics of oligopolistic industries, and how those characteristics shape behaviors and outcomes in specific industries. The chapter analyzes the behavior of specific oligopolistic industries using the economic theories and tools. Companies produce different grades of steel and whichever firm can produce a particular grade of steel for the lowest price will be the most successful. Oligopolistic firms behave like firms in monopolistic competition, although the entry of competitors is less common due to the existence of significant barriers to entry. Companies produce different grades of steel and whichever firm can produce a particular grade of steel for the lowest price will be the most successful. Instead of focusing on branding and the behavior of rivals, firms try to produce steel for the lowest possible price. Oligopoly is the market structure that features the largest amount of tacit, illegal, or legal collusion.