Research Groups Gender Economics Entrepreneurship. Projects and Data Projects Data Service. List of Publications. Calendar Event Archive. Language: en de. When oligopolies result from patented innovations or from taking advantage of economies of scale to produce at low average cost, they may provide considerable benefit to consumers. Oligopolies are often protected by significant barriers to entry, which enable the oligopolists to earn sustained profits over long periods of time.
They typically operate at a level of output where price is greater than marginal cost, so oligopolistic industries are not allocatively efficient. Unlike in the simple example in Figure 1, oligopolists also do not typically produce at the minimum of their average cost curves, so they are not productively efficient. When they lack vibrant competition, they may lack incentives to provide innovative products and high-quality service. The task of public policy with regard to competition is to sort through these multiple realities, attempting to encourage behavior that is beneficial to the broader society and to discourage behavior that only adds to the profits of a few large companies, with no corresponding benefit to consumers.
Privacy Policy. Skip to main content. The economics of tacit collusion. Miller, N. Strategic leniency and cartel enforcement. American Economic Review — Motta, M.
Competition policy: Theory and practice. Cambridge: Cambridge University Press. Murphy, J. The role of anti-cartel compliance programs in preventing cartel behavior. Antitrust 61— Ormosi, P. A tip of the iceberg? The probability of catching cartels. Journal of Applied Econometrics — Stephan, A. Federal Trade Commission. Organisation for Economic Co-operation and Development.
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Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Antitrust Laws and Enforcement. Types of Antitrust Violations. Investing Commodities. What Is a Cartel? Key Takeaways A cartel is a collection of independent businesses or organizations that collude in order to manipulate the price of a product or service.
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