Why there are so many ways oligopoly firms can determine the optimum output level and optimum price?

There are many ways that oligopoly firms can determine the optimum output level and optimum price because in the case where more than two firms are producing identical goods, they can collude and set a standard price and output ratio. In case the firms are producing different products, individual firms can set their level of output and price thus, causing a monopolistic competition. In the event of a perfect substitute in production, there is a likelihood of price competition and the firm with lower costs and better quality will attract more customers thus, driving the other firms out of business and creates a monopoly in the case where the firms originally existed as a duopoly.

The demand curves in the oligopoly market setting tend to be indeterminate since any move made by the rivals of a firm may end up ganging the demand curve of the primary firm hence, it tends to be more elastic. Another reason is that every firm has the potential to apply influence on the price-output policies. All the firms are influential in a way that the rival firms are conscious of the probable effects of change of the price-output policy by a single firm.