Non Collusive Oligopoly Diagram. Non price competition is a consistent and crucial feature of the competitive strategies of oligopolistic firms especially when they are growing or defending market share. Non collusive oligopoly model sweezy s model presented in the earlier section is based on the assumption that oligopoly firms act independently even though firms are interdependent in the market.
An oligopoly is a market dominated by a few producers. The price and output in oligopoly will reflect the price and output of a monopoly. If firms in oligopoly collude and form a cartel then they will try and fix the price at the level which maximises profits for the industry.
Price fixing represents an attempt by suppliers to control supply and fix price at a level close to the level we would expect from a monopoly.
Suppose chamberlin s model of oligopoly consisting of an small group of firms and sweezy s kinked demand curve models are regarded as most important models of this category. They will then set quotas to keep output at the profit maximising level. Equilibrium under independent action. There are two types of oligopoly collusive and non collusive in a collusive oligopoly the firms may collude together and decide not to compete with each other and maximise total profits of the two firms together.
