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Compare and Contrast the Stackelberg and Cournot models of Oligopoly. Under Which One of these Two Market Types is the Formation of a Cartel More Likely?
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COMPARE AND CONTRAST THE STACKELBERG AND COURNOT MODELS OF OLIGOPOLY. UNDER WHICH ONE OF THESE TWO MARKET TYPES IS THE FORMATION OF A CARTEL MORE LIKELY? An oligopoly is a market structure that is characterised by 3 elements; firstly, there must be few firms and many buyers, for example, the bulk of the market supply must be in the hands of a relatively few large firms who sell to many small buyers. Secondly, the products must be homogeneous or differentiated, that is, the products offered by suppliers may be identical or, more commonly, differentiated from each other in one or more respects. These can include differences of a physical nature or those that are falsely created through advertising. Finally, there must be barriers to entry, which would make it difficult for new firms to enter the market. A situation where an industry is dominated by a small number of suppliers, is known...
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