00:02
Okay, so when we're thinking about oligopoly, it's first, you know, important to think about what an oligopoly is.
00:11
Most of the time, economists think about oligopolis as being two, you know, somewhere between two and six firms that are all large enough within their own right, but then have this interdependence relationship whereby each firm is so large that the actions of every other firm influence, is the decision of each other firm.
00:36
So to add a little more detail to that, you know, one thing that we might say is that there's few firms, you know, that is somewhere between like two and six.
00:50
There has to be few enough firms that each individual firm has a large enough market share to matter.
00:59
And there has to be also few enough firms that each individual.
01:05
Firm could conceivably take the actions of every other firm and integrate it into their own decisions.
01:17
So what i said there, they also have this interdependence.
01:26
That is, they price set based on what each other is doing.
01:32
Thirdly, we also see that these few firms try to keep their market share.
01:37
So one of the most common mentioned characteristics of perfectly competitive markets is no barriers to entry or exit.
01:48
In oligopolis, we see that there do exist barriers, barriers to entry.
01:58
Okay, so we have barriers to entry so that these very few firms can actually keep their market power.
02:07
They don't lose it.
02:08
So in perfectly competitive markets, whenever there are profits, new firms will enter that market, and then all the profits get spread out so thin until we reach the point where no individual firm is making any economic profit.
02:25
So oligopolis, in order to keep their market power, set up these barriers to entry.
02:32
So another thing that we see from this typically is higher prices than the market.
02:39
The perfectly competitive case.
02:42
And to see this, we need to look at how oligopolis set their prices.
02:48
So very quickly, if we have a price and a quantity, oligopoly firms have a downward sloping individual demand curve.
02:57
That is the demand for product from that specific firm.
03:03
And oftentimes, not always, but another characteristic is that these firms have differentiated products.
03:12
That is, market agents can tell the difference between these two, you know, these several different suppliers, maybe not perfectly, but there are differences...