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Price fixing in detergent industry

a) Identify and explain the key features of an oligopolistic industry. Illustrate your answer with reference to an industry of your choice.

b) Examine the case of price fixing within the detergent industry. Examine and evaluate why price fixing would be likely to occur in this industry and explain the economic rationale behind the decision not to fine Henkel.

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a) Identify and explain the key features of an oligopolistic industry. Illustrate your answer with reference to an industry of your choice.
The important features of an oligopolistic industry are there is a small number of sellers, they are aware of the actions of other and decision of one firm is influenced by actions of other firms. Other important features are that there can be long term profits, there is knowledge about what the competition is doing, they have the ability to set prices, high entry/exit barriers, and profit maximization. Since the oligopoly firms have the ability to set prices, the action taken by others is considered when setting prices. One industry where there is oligopoly is that of steel. There are high entry/exit barriers because the investment required is high. There are few firms that make steel and each ...

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This answer offers cogent arguments relating to Price fixing in detergent industry

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