Difference between collusive and non-collusive oligopoly?

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2026-03-14 20:40

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If in an oligopoly market, the firms compete with each other, it is called a non-collusive, or non-cooperative oligopoly. If the firm cooperate with each other in determining price or output or both, it is called collusive oligopoly, or cooperative oligopoly.

Collusive oligopoly exists when the firms in an Oligopolistic market charge the same prices for their products, in affect acting as a monopoly but dividing any profits that they make.

Non collusive oligopoly exists when the firms in an oligopoly do not collude and so have to be very aware of the reactions of other firms when making price decisions.

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