Non-colluding oligopolies

Definition

Non-colluding oligopolies are markets where a few large firms dominate and have the ability to influence prices, but they do not engage in explicit collusion or price-fixing agreements.

Analogy

Imagine a group of friends who all sell lemonade in the same neighborhood. Each friend has their own lemonade stand and can set their own prices, but they keep an eye on what the others are doing and adjust their prices accordingly to stay competitive.

Related terms

Price makers: In non-colluding oligopolies, firms have the power to set prices rather than being price takers like in perfect competition.

Barriers to entry: These are obstacles that make it difficult for new firms to enter an industry, such as high startup costs or government regulations.

Market concentration: This refers to how much market share is held by a small number of dominant firms in an industry.