An important form of price fixation under oligopoly is known as __________.

price leadership

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collusive oligopoly

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courtnot model

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Solution

The correct option is A price leadership
Oligopoly is a situation where there are few firms who dominates the market. The market is very highly concentrated. There is no monopoly in this but the firms are divided into groups using the group theory. Every group has a leader who fixes price and all the policies. Hence, an important form of price fixation under oligopoly is known as price leadership.

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(a) What is meant by price rigidity, under oligopoly.
(b) Elaborate the impliation of the conditions of equilibrium of a firm.

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