Which of the following is not a characteristic of oligopoly firms?

Which of the following is not a characteristic of oligopoly firms?

a. non-price competition, such as advertising and promotions

b. perfectly elastic demand curves for individual firms

c. strategic dependence

d. product differentiation

Answer: b. perfectly elastic demand curves for individual firms

An oligopolistic market structure is characterized by a few large companies and many small companies competing in the market. These firms usually practice non-price competition (a), whereby other strategies apart from changing prices are adopted with publicity, offers and qualities being used to influence customers to patronize them. Organizational dependence (c), defined as each firm depends on its competitors’ activities, often resulting in a game-like situation. Some of the strategies that many oligopolists use include (d) product differentiation where they try to offer packages that differ from competitors. But, as noted earlier, the demand curves facing oligopolists are not perfectly elastic (b); this is an iconographic of perfect competition where prices are taken by the respective firms. Thus, while competitors in other industries may have very limited or indeed no price-making capacity, oligopolists enjoy a certain degree of this power in view of their market strength