Collusion and Oligopoly, 25-Marker Walkthrough

🌟 A-Level Economics Students, this one's for you! 🌟
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Get ready to enhance your understanding with this comprehensive walkthrough of a 25-marker question on collusion and high market share, designed for Edexcel A-Level Economics Paper 1. We'll delve into key topics, including oligopoly, natural monopolies, and game theory, providing insights to help you excel.
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💡 Breakdown of key economic concepts
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📈 Insights into Edexcel A-Level Economics Paper 1
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[@nattycarey2083]

Thank you🙏

[@Joe.Z.L]

How would you draw the game theory graph showing short term and long term differences

[@kumidaley9729]

In evaluation, could you talk about how if it is say a five firm oligopoly, you would need all five firms to collude otherwise the theory of kinked demand would kick in.

[@xxminecrafterxx1266]

yes an evaluation of whether or not collusion will ocur is if the concentration ratio of the market is low, cooperation between all firms is unlikely compared to if there was a high concentration ratio meaning there is increased likehood of the collusive agreement from being broken #

[@RS-vg7yc]

Yeh and you need the biggest firm in the market

[@elliot2392]

Could you evaluate the second KAA with the fact that predatory pricing/ overt collusion is illegal - resulting in large fines and diminished brand reputation?

[@ella_mcgov2013]

Yes and you could also talk about how collusion might break down because of whistleblowers and how they gain incentive to whistle blow and break agreement

[@kwayvldn3682]

@@ella_mcgov2013that’s where the game theory comes in right?

[@ella_mcgov2013]

@@kwayvldn3682 Yep talking about the prisoner strategy ect firms will always do what is best for them

[@ella_mcgov2013]

@@kwayvldn3682Yep

[@rubentaheem]

could you use game theory as an application/analysis in any way?

[@rlnn17]

Could you talk about how collusion allows struggling firms to remain competitive when having to deal with regulation policies?

[@bobthebuilder6545]

The basic principle of a successful collusion is that it can allow you to make a greater increase in the profits gained. This is because it essentially leaves consumers no choice but to buy their goods. In the case of struggling firms the collusion allows them to gain profits and with this they are able to invest this money back into their business essentially R&D. This would allow them to create higher quality goods and this would make them more competitive since consumers often prefer high quality goods. I’m pretty sure u evaluate it with there may be brand loyalty so struggling firms can’t compete or something like that. Answer may not be perfect since I just thought of this on the spot lol

[@bobthebuilder6545]

Also to link it to regulation policies the r&d allows them to gain the funding necessary to create a good in higher quality and still follow regulation policy

[@JackAttar]

Do you not have to use the source ?

[@breadst1c772]

no, not for the 25 marker in paper 1 and 2

[@sxm261]

I believe if there is Info provided above when doing a 25 marker you can use it as context.