The significance of interdependence and uncertainty in oligopoly
In an oligopoly, each firm's decisions directly affect its rivals. Because firms know this, every pricing or output choice carries genuine uncertainty about how competitors will react.
Real World
When Asda cut grocery prices aggressively in 2023, Tesco and Sainsbury's responded within weeks with matching 'Aldi price match' schemes — illustrating that no supermarket can change strategy without triggering an immediate, uncertain response from rivals.
Exam Focus
Use the word 'interdependence' explicitly and explain why it creates uncertainty; then link uncertainty to price stickiness or non-price competition for full chain-of-reasoning marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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