The factors which influence prices, output, investment, expenditure on research and advertising in oligopolistic industries
Several forces shape what oligopolists charge, produce, and spend. These forces include how rivals react, whether firms collude, and how easy it is for new competitors to enter the market.
Real World
Apple's decision to spend $22 billion on R&D in 2023 was shaped by the threat from Samsung and Google: without rivals, that investment incentive shrinks. Barriers like Apple's App Store ecosystem also let it maintain premium pricing above competitive levels.
Exam Focus
Link each factor explicitly to a firm's decision variable (price, output, or spend); vague lists of influences without causal links will not access the higher mark bands.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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