... they can affect the market price. This relatively small number of large scale firms, sell branded products. * There would be significant entry barriers into the market in the long run which reduce the contestability of the market. * Within the market each firm must take into account likely reactions of rivals to any change in its prices or other market decisions. This is known as mutual interdependence. Although there is no single theory of how firms determine price and output decisions for an Oligopolist there are four commonly used models: 1. The Kinked Demand Curve 2. Price Leadership 3. Cartel 4. Non-price Competition The Kinked Demand Curve is one theory that is used to analyze firms' behaviour in an oligopoly with no collusion between firms. It is observed that where there is oligopoly, raising product prices would mean a significant loss of sales because buyers would switch to competing products for which the price had stayed ...

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