Economics Oligopoly Questions
The price signaling model in oligopoly refers to a situation where firms in an oligopolistic market communicate their pricing intentions or strategies to each other through their pricing decisions. This can be done explicitly or implicitly, and it allows firms to coordinate their pricing behavior and avoid price wars or intense competition. By observing and responding to each other's pricing actions, firms can signal their intentions to maintain or adjust prices, which helps them maintain stability and maximize their profits in the market.