AP (Advanced Placement) Microeconomics Firm Behavior & Market Structure-Oligopoly Terms and Persons (Page 1 of 1)

Cartel

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Cartel is an arrangement/organisation among producers or business firms to exert control over market by influencing price of the product or setting production targets. The main purpose of cartels is to maximize profit, or to avoid losses among the member firms due to competition. Cartel is a collusive agreement and is illegal.

Oligopoly

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Oligopoly is a market form. More than a typical market form, uniqueness of oligopoly is that compared to other market models like perfect competition, oligopoly looks a practical market situation.

Oligopoly, by definition is a market where a few sellers producing the product. There can be around 6 - 9 firms under oligopoly. Hence it is called competition among the few. Under oligopoly, there is intense interdependence among the firms. One firm՚s action may influence revenue and profit conditions of others. Advertising is an important part of oligopolistic market situation.

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