Oligopoly (Online Lesson)

In this online lesson, we cover the oligopoly market structure.

WHAT YOU'LL STUDY IN THIS ONLINE LESSON

• the characteristics of an oligopoly market structure
• the construction of a kinked demand curve
• price and non-price competition
• the existence of collusion and cartels
• how game theory impacts on the behaviours of oligopolistic firms

Additional teacher guidance is available at the end of this online lesson.

HOW TO USE THIS ONLINE LESSON

Follow along in order of the activities shown below. Some are interactive game-based activities, designed to test your understanding and application of oligopoly. Others are based on short videos, including activities for you to think about and try at home, as well as some extra worksheet-based activities.

If you would like to download a simple PDF worksheet to accompany the video activities, you can find it here. You can print it off and annotate it for your own notes, or make your own notes on a separate piece of paper to add to your school/college file.

ACTIVITY 1: VIDEO - KEY CONCEPTS

In this video, we look at the key concepts that are required when considering the oligopoly market structure including its characteristics and and some real world examples.

ACTIVITY 2: VIDEO - THE KINKED DEMAND CURVE

Kinked demand curve theory is used to explain some of the behaviours of firms that exist in an oligopolistic market. This video discusses how the kinked demand curve is constructed and how it illustrates non-price competition.

ACTIVITY 3: VIDEO - PRICE AND NON-PRICE COMPETITION

This video explained how firms in an oligopolistic market compete with one another and provides some real world examples of non-price competition in action!

ACTIVITY 4: VIDEO - CARTELS AND COLLUSION

The existence of price rigidity in an oligopolistic market can encourage firms to collude. This video examines the causes of business collusion, the creation of cartels and how this can be represented diagrammatically.

ACTIVITY 5: VIDEO - GAME THEORY

This video examines how economists use game theory to model the behaviour of businesses in concentrated markets.

ACTIVITY 6: GAME - TAKEOVERS

Challenge yourself with this short interactive quiz where you have 60 seconds to match the 8 real-world examples of takeovers in concentrated markets.

ACTIVITY 7: GAME - FIRMS THAT EXIST IN OLIGOPOLY MARKETS

Have a go at this 'concentration' activity where you need to match 6 pairs of firms that exist in the same oligpolistic market.

EXTENSION TASKS

1. Read this article from the Economist on cartels on Mexico. Identify the reforms put in place by the Mexican government and explain how these might reduce collusive behaviour.
2. Read this article from the Economist on Organisation of Petroleum Exporting Countries (OPEC). Use a cost and revenue diagram to analyse the impact of OPEC’s production cut on the cartel’s profits.

ADDITIONAL TEACHER GUIDANCE

This lesson comprises:

• around 30 minutes of guided video content, spread across 4 videos
• around 15-20 minutes of student thinking and activity time throughout the videos
• 2 interactive games, designed to build awareness of real-world economics and application
• an additional task reviewing the global examples of cartels and collusion.

Follow up this lesson by trying the online lesson on Contestable Markets.