Firms in an oligopoly set prices, whether collectively—in a cartel—or under the leadership of one firm, rather than taking prices from the market. Profit margins are thus higher than they ...

Morgan Stanley analysts Joel Crane and Tom Price wrote in a report published on Dec. 11 that major iron ore miners now have an incentive to exercise market power.

In particular, duopoly and oligopoly frameworks illustrate how firms’ strategic interactions, such as output and price decisions, profoundly influence market stability and efficiency.