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Barriers to entry and exit are also likely to exist. In oligopoly markets there is product differentiation, the extent of which depends on the type of product produced. This leads to interdependency, as the actions of one large firm will directly affect another large firm. Therefore, firms are said to be operating under conditions of uncertainty because firms are unable to judge the future actions of their competitors and hence their own firm’s future.
For example, if an oligopolist firm raises its prices, it could risk loosing market share if its competitors do not follow which would lead to lower profits for that firm...
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