Economics Oligopoly Questions
The price undercutting model in oligopoly refers to a situation where firms in an oligopolistic market engage in aggressive price competition by setting prices below their competitors in order to gain a larger market share. This strategy involves reducing prices to a level that is lower than the prevailing market price, with the aim of attracting customers away from rival firms. Price undercutting can lead to a price war among competitors, resulting in lower profits for all firms involved.