Question

Why is it more likely for an industry to be an oligopoly than competitive in the presence of economies of scale?

Answer 1

Oligopolies are more likely to exist in industries with economies of scale because larger firms can produce goods at lower average costs, giving them a competitive advantage over smaller firms.

Step-by-step explanation:

Oligopolies are more likely to exist in industries with economies of scale because these industries have high barriers to entry and limited room for competitors. When economies of scale are present, larger firms can produce goods at lower average costs. This gives them a competitive advantage over smaller firms, making it difficult for new firms to enter the market. The limited number of firms in an oligopoly can then have more control over prices and market outcomes.