One characteristic not typical of oligopolistic industry isa)horizonta...
Horizontal demand curve is not typical in an oligopolistic industry. In an oligopoly, there are only a few firms operating in the industry, and each firm's actions can have a significant impact on the market. This leads to a unique set of characteristics that differentiate it from other market structures, such as perfect competition or monopolistic competition.
Horizontal demand curve:
A horizontal demand curve represents a perfectly elastic demand, where any change in price by the firm does not lead to a change in quantity demanded by consumers. In other words, consumers are extremely sensitive to changes in price, and the firm can sell any quantity at the prevailing market price. This situation is characteristic of perfect competition, where there are numerous small firms, and none of them have the ability to influence the market price.
Oligopoly characteristics:
1. A small number of firms in the industry: Oligopoly is characterized by a small number of firms, usually between two and ten, that dominate the market. These firms have a significant market share and can influence market conditions.
2. Non-price competition: Oligopolistic firms often engage in non-price competition, where they compete based on factors other than price, such as product differentiation, branding, advertising, and customer service. This allows firms to create a unique selling proposition and attract customers without resorting to price reductions.
3. Price leadership: In some cases, one firm in an oligopoly may emerge as a price leader. The price leader sets the price, and other firms in the industry follow suit. This helps maintain price stability and reduces the likelihood of price wars between firms.
Reasons for the absence of a horizontal demand curve:
The absence of a horizontal demand curve in an oligopoly can be attributed to several factors:
1. Interdependence: In an oligopoly, firms are interdependent and take into account the actions and reactions of their competitors. Any change in price or quantity by one firm can lead to a strategic response from other firms, affecting the overall market demand.
2. Market power: Oligopolistic firms have market power, which allows them to influence market conditions. They can manipulate prices and quantities to maximize their profits. As a result, the demand curve they face is downward sloping, indicating that changes in price will affect the quantity demanded by consumers.
3. Product differentiation: Oligopolistic firms often differentiate their products to attract customers. This leads to a downward sloping demand curve, as consumers may be willing to pay different prices for different products based on their perceived value.
In conclusion, the absence of a horizontal demand curve is not typical of an oligopolistic industry due to factors such as interdependence, market power, and product differentiation. Oligopolistic firms face a downward sloping demand curve and engage in non-price competition to attract customers.
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