Question

In: Economics

  3. Oligopoly terminology Suppose three companies, Optimax, Megachug, and Thirstoid, dominate the sports drink market....

 

3. Oligopoly terminology

Suppose three companies, Optimax, Megachug, and Thirstoid, dominate the sports drink market. Optimax enjoys the largest market share. Megachug, dissatisfied with its market share, begins offering its sports drink in a new container that, according to Megachug, keeps the beverage colder for a longer period of time.

This is an example of:

  • Non-price competition
  • A price war
  • Price leadership

Solutions

Expert Solution

Option A is correct.

Non price competition through product differentiation is one of the characteristics of an oligopoly models. here the firm is differentiating its product without competiting in price so that all the three still could remain profitable, else price wars lead to perfect competition.

Rahul Sunny answered 2 years ago
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