WHAT IS DEMAND CURVE INDETERMINATE IN OLIGOPOLY MARKET ?
Firm's demand curve is indeterminate under oligopoly because there is a high degree of interdependence among the firm. price and output policy of 1 firm has a significant impact on the price and output policy of the Rival firms in the market when one firm lowers its price to increase its sales the Rival firms may also lower the price to retain their sales and when one firm raises the price
The Rival firms may not do it so that the firm which raises the price suffers the loss of market share. in such a situation it becomes very difficult to estimate change in firm's sale caused by a change in price. A precise relationship between price and sales cannot be established . It implies that the firm's demand curve cannot be drawn .
The Rival firms may not do it so that the firm which raises the price suffers the loss of market share. in such a situation it becomes very difficult to estimate change in firm's sale caused by a change in price. A precise relationship between price and sales cannot be established . It implies that the firm's demand curve cannot be drawn .