For a firm, strategic interactions with other firms in the market become more important as the number of firms in the market becomes larger.

Question

Quizplus · Accepted Answer

Strategic interactions become more important in markets with fewer firms because each firm's actions have a more significant impact on the market and on the other firms. In markets with many firms, individual actions have less impact, reducing the importance of strategic interactions.

For a Firm, Strategic Interactions with Other Firms in the Market