Why demand curve under oligopoly is …
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Yogita Ingle 7 years, 3 months ago
A firm’s demand curve is indeterminates under oligopoly because there is high degree of interdependence between the firms. Price and output policy of one firm has a significant impact on the price and output policy of the rival firms in the market. When’ one firm lowers its price, the rival firms may also lower the price. Contrarily, when one firm raises the price, the rival firms may not do it. Accordingly, it becomes very difficult to estimate change in firm’s sale caused by a change in price. So, a precise relationship between price and sales cannot be established or the firm’s demand curve cannot be drawn.
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