Distinguish between perfect oligopoly and imperfect oligopoly. Al… - Vidyadip

Question

Distinguish between perfect oligopoly and imperfect oligopoly. Also explain the "interdependence between the firms" feature of oligopoly.

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Answer

In oligopoly market, if the product is homogeneous then it is called Perfect oligopoly. When the product is hetrogeneous then it is called imperfect oligopoly.
Under oligopoly, firms are interdependent. There are only a few firms in such a market. If some firm changes its decision regarding its output or price, it will affect other firms. They react, so the firm while taking decision about price and output keeps in mind the reaction of other firms.

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