In the context of oligopoly, firms operate in a market structure where a few firms dominate. Let’s analyze the options presented:
- A. Non-price competition such as advertising and promotions: This is indeed a characteristic of oligopoly. Firms often engage in non-price competition to differentiate their products and gain market share.
- B. Perfectly elastic demand curves for individual firms: This option is the correct answer. Oligopolistic firms face a kinked demand curve rather than a perfectly elastic demand. Perfectly elastic demand is characteristic of perfectly competitive markets where firms are price takers.
- C. Strategic dependence: Oligopoly firms are strategically dependent on each other, meaning the actions of one firm directly affect the actions and profitability of others. This is a key feature of oligopoly.
- D. Product differentiation: Oligopoly often involves product differentiation, where firms offer products that are slightly different from one another, allowing them to have some control over pricing.
Therefore, the characteristic that does not apply to oligopoly firms is B. perfectly elastic demand curves for individual firms.