Oligopoly in the auto industry

5) The American automobile industry has been an archetypical oligopoly. Show why this statement is true.

6) Explain the cutthroat competitors reasons for not raising or lowering his price, thereby accounting for the kink in his demand curve.
The cut-throat competitors’ reason for not raising or lowering prices are that if a competitor increases his prices about the existing level, the other competitors will not follow and the firm that has increased the price will lose its market share to other competitors. On the other hand if the firm lowers its prices the competitors will also lower their prices to protect their market share and so the firm that has taken the initiative to reduce the price will only gain slightly by way of quantity sold. What happens in the kinked demand curve model is that the demand curve above the point of equilibrium is very elastic but the demand curve below the point of equilibrium is inelastic. The overall effect of the kinked demand curve is that prices remain rigid.
7) What are the basic provisions of a collective bargaining agreement? Explain the differences between meditation and arbitration.

Don't use plagiarized sources. Get Your Custom Essay on
Oligopoly in the auto industry
From $10/Page
Order Essay

Solution Preview
5) The American automobile industry has been an archetypical oligopoly. Show why this statement is true.

The above statement is true because the automobile industry in the US enjoyed economic profits for a long period of time, there were few sellers, and there were innumerable buyers. In the automobile market the buyers possessed limited information about the product, the products were differentiated, and the sellers were interdependent. For this reason automobile makers kept a close watch on the prices of its competitors.

A good example of a price war between auto manufacturers occurred in 2005, when GM announced that all buyers would receive the discount normally reserved for employees. This caused its rivals, Chrysler and Ford, to announce similar programs. For more on this, see http://www.cbsnews.com/stories/2005/07/07/earlyshow/contributors/raymartin/main707345.shtml. Clearly, these companies are interdependent and watch each other closely, which is the key feature of oligopoly.

6) Explain the cutthroat competitors reasons for not raising or lowering his price, thereby accounting for the kink in his demand curve.

When a seller in a cutthroat market increases his prices, his competitors will not follow suit and he will lose market share. However, if the seller lowers his prices, his competitors will follow suit to protect their market shares. This means that the demand curve becomes less elastic, as the quantity consumed is less responsive to the firm’s …

Solution Summary
Cutthroat competition, oligopoly, collective bargaining, and poverty..To continue with the answer click on mycoursewriter.com/

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 20% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with My Course Writer
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 10k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Communications
Well done! I thank you very much!
Customer 452483, July 9th, 2021
English 101
Great work! Thanks!
Customer 452567, August 2nd, 2022
Microbiology
Appreciate all of your hard work! Thank you so much!!
Customer 452483, September 14th, 2021
Healthcare Writing & Communications
Perfect! Thank you for also remembering to highlight the necessary words. Appreciate all of your help and hard work!
Customer 452483, November 7th, 2021
Group Dynamics
Great job. I appreciate it.
Customer 452521, November 22nd, 2021
Nursing
Excellent. Thank you.
Customer 452487, August 26th, 2021
Nursing
Excellent! Thank you.
Customer 452487, October 16th, 2021
English 101
Perfect! Very informative! Appreciate all of your hard work! Thank you very much.
Customer 452483, September 22nd, 2021
Communications
Thank you! It was great :)
Customer 452483, July 26th, 2021
Healthcare Writing & Communications
Perfect! Thank you so much for all of your help!
Customer 452483, October 31st, 2021
English 101
Amazing thank you!
Customer 452615, August 1st, 2022
Psychology
On point! Appreciate all the hard work!!
Customer 452483, August 16th, 2021
1159
Customer reviews in total
96%
Current satisfaction rate
2 pages
Average paper length
47%
Customers referred by a friend
OUR GIFT TO YOU
20% OFF your first order
Use a coupon 20OFF and enjoy expert help with any task at the most affordable price.
Claim my 20% OFF Order in Chat