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Author Question: How does a dominant firm try to prevent new competitors from entering the oligopoly ... (Read 65 times)

HCHenry

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on: Jun 30, 2018
How does a dominant firm try to prevent new competitors from entering the oligopoly market?

Question 2

In most areas, there are a large number of qualified primary care physicians whose services are highly personalized. In addition to price, factors such as age, sex, location, and personality influence the choice of physician. The primary care physician market is probably:
 a. perfectly competitive.
 b. oligopolistic.
 c. monopolistic.
 d. monopolistically competitive.


CAPTAINAMERICA

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The higher the profits of the dominant firm and the existing fringe, the higher the rate at which new fringe members will enter the market. The dominant firm might be able to maximize the present value of its future profits by pricing below the simple single-period maximum. Such low pricing strategy by the dominant firm is referred to as a price war.

Answer to Question 2

d


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