ABSTRACT
This chapter analyses firm behaviour in the context of the argument that unlike other market structures, oligopoly is stabilising. It explores the behaviour that enables firms to overcome market conditions to become concentrated and how firms create the environmental conditions they need for their own survival. The archetypal Kaleckian firm has survived market imperfection to craft and inhabit a stable environment, of which size, and so economies of scale, is a critical threshold. Interdependence alternatively means that oligopolistic firms have created an ecosystem. To the extent that firms succeed in creating stability, they have to commit resources to maintaining that stability. The key turning point happens when the requisites to maintain flexibility become outweighed by the rigidities they have created over time in stabilising the environment.
