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In an oligopoly, there are a few large firms dominating the market. While these firms have some control over prices due to limited competition, they cannot fully dictate prices like a monopoly does. Here's why:
1. Interdependence: In an oligopoly, firms are highly interdependent, meaning they closely monitor and react to each other's pricing and output decisions. If one firm raises prices, others may not necessarily follow suit, as they could choose to lower prices to gain market share.
2. Competition: Unlike in a monopoly where there is no direct competition, in an oligopoly, firms compete with each other, albeit in a limited way. This competition constrains their ability to unilaterally set prices at any level they desire.
3. Price Leadership: Sometimes in an oligopoly, a dominant firm may set a price that other firms in the industry then follow. However, this is not the same as full price control seen in a monopoly, as the leading firm's pricing strategy is often influenced by market conditions and the reactions of competitors.
In summary, while firms in an oligopoly have some influence over prices, they cannot dictate prices as decisively as monopolies due to market dynamics, interdependence, and competition among the firms. Therefore, the statement that firms in an oligopoly can dictate price like those in a monopoly is False.
