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Oligopoly :sample question
America's Water Meter Industry is dominated by four firms: Rockwell, Badger, Neptune and Hersey. Rockwell has 35% market share, and the remaining share the rest. Demand is very inelastic and there is barrier to entry due to economies of scale. The firms, fearing that profits may fall to competitive levels have, have set prices cooperatively. They've played "repeated games". There is no attempt by any firm to undercut price and each is satisfied with its market share.
a. Use graphs to explain the concepts mentioned here.b. Explain all the economic terms used here, in relation to oligopoly.c. Explain in Olipolistic terms, and with graphs, what is really happening.d. Shoud the US anti-trust laws be invoked in industries like this.
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