Abstract: The oligopoly market structure is very apparent in the soft drink industry. Two large producers, Coke and Pepsi, maintain a dominant role in the industry. High barriers to entry prevent smaller firms from making a large impact this allows these two firms to compete on areas other than price in an attempt to maximize profit. In the non-collusive oligopolistic model, there is interdependence and rivalry among the firms. Depending on the conjectures made by the firms, we get different models. The whole analysis of the kinked demand curve points out that price rigidity in oligopolistic markets is likely to prevail if there is a price reduction move on the part of all sellers. Changes in costs and demand also lead to price stability under normal conditions so long as the MC curve intersects the MR curve in its discontinuous portion. But price increase rather than price rigidity may be found in response to rising cost or increased demand. The Cournot model deals with the case when the firms make conjecture that the rival would stick to the previous level of output. Here the firms deal with output changes. Finally, the firms together end up producing 2/3 of the total market demand. In the Bertrand model, the case is similar to that of Cournot except that the firms compete in terms of price. Here they end up producing the competitive level of output. In the Stackelberg model one firm acts as the leader and the other follower. A firm is a leader in the sense that it knows the reaction function of the follower. The leader maximises profit after incorporating the reaction function of the follower.
Keywords: Non collusive, oligopoly, market, price, Nigeria.
Title: A REVIEW OF NON-COLLUSIVE OLIGOPOLY AS IT PATTERNS TO NIGERIA
Author: Idisi P. O., Ogwu I. J., Luka A.
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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