Oligopoly is a market structure characterized by a small number of relatively large firms that dominate an industry (Oligopoly, 2000). It can contain 2 to 20 firms that dominate it. As the number of firms increase, it becomes monopolistic competition where dominance is controlled by one firm. An oligopolistic firm is relatively large compared to the overall market, has a substantial degree of market control, and has significantly greater capital than a monopolistically competitive firm.
Key features of an oligopolistic firm include relative size and extent of market control of interdependence among industry firms, the actions of one firm depends on and influences actions among others, and it tends to be a prime source of innovation that promotes technological advances and economic growth. The three major characteristics are a small number of large firms, identical or differentiated products, and barriers to entry where the market is controlled through barriers to entry, such as patents, resource ownership, government franchises, startup costs, brand name recognition, and decreasing average costs. Oligopolistic firms tend to be diverse and, at the same time, exhibit interdependence, rigid prices, nonprice competition, mergers, and collusion, where two or more firms secretly control prices, production, and other market aspects.
A concentration ratio indicates the relative size of firms in relation to the particular industry as a whole (Concentration Ratio). Low concentration...
Market Structures: Market structure is described as the institutional or organizational attributes and characteristics of a market. In most cases, the market structures mainly focus on the characteristics that impact the nature of pricing and competition through it's not important to major simply on the market share of the existing companies in a particular industry. Some of the most common market features include the number of companies, the nature of
Managerial EconomicsOutlineIntroductionOverview of Market StructureOverview of PricingRelationship between Market Structure and Pricing StrategyMarket Structure Pricing Practices� Pricing Practices for Monopolistic, Monopolistic Competition, and Oligopolistic Markets� Pricing Practices for Perfect Competition Markets� Price Matching� Inducing Brand Loyalty� Randomized PricingConclusionReferencesMarket Structure Pricing PracticesMarket structure is one of the major factors that shape decisions made by business owners and managers. Generally, business owners and managers do not make decisions in a vacuum as
There is a near limitless supply of snack food available at any gas station, grocery store and convenience store in America, including packages pretzel products. With this many potential competitors, Auntie Anne's Hand Rolled Soft Pretzels must compete vigorously. The competitors range from very large, well-financed competitors with rock-solid brands to mom-and-pop operators and small businesses. Some sell products at a premium, while others are cost leaders. This is
market structures in detail and analyses the pricing strategies that the firms have to undertake when they operate in different regimes. The case study on Toyota is considered next, which indicates that firms competing in various structures does not only have to focus on price and quantity ceteris paribus, they also have to consider external and internal variables that have a bearing on these decisions. Introduction to Market Structures Market structures
Market Structures Table Compare the four market structures by filling in the table. Perfect competition Monopoly Monopolistic competition Oligopoly Example organization Hair Shampoo Companies Saudi Arabian Oil Cereal companies Cell phone companies Goods or services produced by the organization Hair products Oil and gas Breakfast cereals and comparable products Cell phones Barriers to entry Chemistry knowledge Raw materials few Technology Number of organizations Many Few Few Few Price elasticity of demand Is there a presence of economic profits? yes yes Based on the details available to you in the strategic plan, marketing overview, market surveys, and other
Over the last few years, the government has exerted more control on the insurance industry by controlling premium rates meaning the industry has become less competitive on pricing. In addition to this, through Obamacare, the government has set requirements for healthcare insurers which have significantly reduced their medical loss ratio Dinan 396. The second factor that affects the degree of competitiveness of the industry is the number of companies operating
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