Your paper should emphasize quality rather than quantity, and its structure should contain four sections: Introduction and objective, Review of Literature, Economic Analysis and Summary and...

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Title of the paper: Strategic Actions by Oligopoly Firms
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I. Introduction and objective
Market structure plays a very important role in managerial economics. Oligopoly is a most common form of market structure where few large firms usually dominate the entire market. Sime of them are so large that they enjoy significant market power and able to affect the market price. A very important feature of oligopoly firms is that each firm’s optimal action depends on the actions of the other firm. While one firm intends to take any business decision, it has to take into account the strategic action of its rivals. The managers of the firms have to make predictions about how the key rivals will react to any decision they make. The resulting interdependence between firms and strategic behaviour make decisions difficult, complicated and uncertain. Price wars are common among the oligopoly firms but more than price wars the firms are found to engage in non-price competition. The purpose of this paper is to provide a thorough analysis of strategic actions of how oligopoly firms have to come up with the problem of interdependence and how they remain competitive in the market. (Maurice)
The key objective of this paper is to understand how the oligopoly firm compete with each other. Since the competition in oligopoly market structure is too intense, firms have to consider non-price strategic actions more than price competition. Oligopoly firms engage in strategic decision makings in order to have the most profitable outcome. The primary aim of this study is to examine different strategic actions by oligopoly firms in the real-world scenario. With the help of economic theories, concepts and real-life examples, this paper explores various competitive strategies by large oligopoly firms and how they help the firms to remain competitive in the market.
II. Review of Literature
The consequence of different strategic moves in oligopoly games has been the subject of extensive research in economic literature. There are several theoretical models in the study of managerial economics to understand the strategic behaviour of oligopoly firms that includes Sweezy models, Bertrand Competition, Cournot’s model, Stakelberg model and many others. Tong ZhangB. Wade Brorsen (2011), in their paper have thoroughly analysed the agent- based model. With the eampl of a perishable good, their model has shown that the Bertand solution is almost perfect competition when the marginal cost is zero. But in case of non -zero marginal cost, we do not have any theoretical equilibrium in pure strategies in the game. The agent-based model suggests that with one or two firms, prices are near the monopoly level that is completely matched with human experiments. When particle swarm optimization is used, in case of four firms, prices are always at the competitive level. But if genetic algorithm is used, the results are found to be noisier than particle swarm optimization. The results have shown that the human agents can reach the solutions through social norms whereas the it is missed out in simple agent-based model. (Brorsen, November 2011)
There is extensive literature of the entry strategies of various oligopoly firms in the real world. Audu, Amos Anyesha., Danjuma Naisla Hassan., Habakuk Aboki ( 2014) have provided indepth analysis of the entry strategy of Tesco, grocery retail giant, in UK and beyond. Tesco provides keen focus on non-pricing strategies that offers competitive edge to Tesco over its competitors. Non -pricing strategies are the conscious decision by Tesco in order to differentiate their strategy of selling different from their competitors. Tesco concentrates more on pricing strategies that includes advertisement, distribution, branding and club card that are found to be successful business decision and help to expand Tesco’s market share. (Audu, August 2014)
Jeremy I Bulow & John D. Geanakoplos (1985) has discussed about the multimarket oligopoly in their paper. One firm’s action in one market may lead to change the competitor’s strategies in the other market. Now whether the change in firm’s action will cause a cost or benefit in the second market depends on whether competitor’s products are strategic substitutes or complements. So change in the strategic decision in one oligopoly market may affect the profit in the second market. They have extended their analysis to sequential market model where the firm makes a strategic decision in one period considering its impact on the second period. The research study has investigated that a change in one market is associated with a ramification effect in the second market even though the demand in two markets are unrelated. (Geanakopolis, 1985)
III. Economic Analysis with empirical evidence:
A. Strategic behaviour of oligopoly firms:
One of the key feature of oligopoly firms is that they act strategically. The equilibrium price quantity solely depends upon the strategic behaviour of the oligopolistic firms. Strong barrier to entry in the oligopoly market deters entry of new firms in the market. In some cases, oligopoly firms form a cartel and act as a monopoly where each firm split the profit. OPEC is the key example of cartel. Duopoly is another form of oligopoly where only two rival firms only serves the demand for entire market. The Nash equilibrium for such duopoly market occurs at the point where the best response functions for two firms intersect to each other. Duopoly firms produce more output than cartel but definitely charge lower price than the cartel. Price leadership is another arrangement in oligopoly market where one particular firm is selected as the market leader by a group of firms and observe the price sets by the leader and then matches it accordingly. Apart from aviation industry, oligopolies are prevalent in beverage (Coca Cola 45%, Pepsi 31%), Cars (GM 29%, Ford29% and Daimler Christler 16%) and Tobacco market (Phillip Moris 49%, RJR Nabisco 24% and Brown Williamson 15%). (Sheffrin, 2001)
Due to the fewness of the firms in oligopoly market, the firms; demand and marginal...