Economics Oligopoly Questions
Price signaling is a strategy used in oligopoly where one firm adjusts its price in order to communicate information to other firms in the market. This strategy involves a firm changing its price in response to changes in market conditions or the actions of its competitors, with the intention of sending a signal about its future pricing intentions. By doing so, the firm aims to influence the behavior of other firms in the market and potentially coordinate their pricing decisions. Price signaling can help firms in oligopoly to avoid price wars and maintain stability in the market.