Chapter 21: Problem 759
What is the difference between a homogeneous and a differentiated oligopoly?
Short Answer
Expert verified
In a homogeneous oligopoly, a small number of large firms produce and sell identical, indistinguishable products, making price the main basis of competition. Examples include markets for steel and agricultural products. In a differentiated oligopoly, firms sell products with some degree of differentiation in terms of quality, design, or branding, focusing more on non-price factors like product features and advertising. Examples include markets for smartphones, cars, and fast-food restaurants.