Oligopoly, as you may recall, does not lend itself to analysis using profit maximization. Strategic response to competitors' behaviors is the overwhelming force in most Oligopoly decision making.

    This being the case we can't use our graphical theoretical models to predict exactly how firms will behave, but we can observe that when strategy is the primary consideration, there are no market forces to guarantee either allocative or productive efficiency. Where firms successfully collude, outcomes will tend to be similar to those of Monopoly. In more competitive Oligopolies competitive pressures can force firms to adopt outcomes close to P=MC.

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