It can only be operated by bigger companies and every companies have different goals to achieve. These examples can be classified as oligopolies because it has limited amount of firms in the industry. Besides, it is most power held by few bigger firms, it offers differentiated goals and it has low barriers of
A monopoly is the sole seller of its product so it is in “a position of economic strength” because there is no competition, the monopoly can “behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers” without losing market share. The definition represents an oligopoly to an extent because oligopolies do have competition in their market with other firms producing similar or identical products. Therefore they cannot act independently of its competitors. However, oligopolies are price makers and are in a position of economic strength. The definition is more fitting to oligopolies that collude and form cartels because they become more like a monopoly.
There is an assumption among the consumers that there is a non-price difference amongst the competitor's products. There are very few if any barriers to entry and exit and finally the producers control the price up to a specified degree. It's essential to note that in the long run, monopolistic competitive market characteristics are almost the same as of those of the perfectly competitive markets. Their two main differences include production of heterogeneous products by the monopolistic competition and the involving a lot of non-price competition based on the product differentiation. In the short run firms that make profit will break even in the long term because of demand increases and the average total cost increases.
This leads to consumer based pricing. Then there is oligopolies where, on the other hand, only a few organizations control the market. Oligopolies often occur when even if a market is free to enter, a few select companies have already settled and gained the consumers’ trust and therefore control the prices. A common example of an oligopoly is the smartphone market. It is only has a select amount of competitors amongst which two dominate : Apple and Samsung.
Nowadays, there is a problem with finding the right price in the market because consumers want the lowest and producers the highest price. The market structures shows who is a price maker and who is a price taker and so, the level of profit available. Natural monopoly is a type of a monopoly, which is one of the main market structures. But how does a natural monopoly differ from a normal monopoly and what benefits or disadvantages does it bring with it? A monopoly is a market structure, where there is only one supplier or entity of a good or service in the market.
Now, all the monopolies are not terribly bad, in cases that the company uses non-renewable products, or they use natural products. That means that if there are less people manufacturing products with these inputs, then there will less usage of them, and less loss of natural and non-renewable products such as petroleum or paper. Now, of course there are going to be advantages to having a monopoly, as long as you own it, with reasons such as: Having economies of scale, which it is always good to have, since it benefits you to. You have higher exports revenue in your country and being able to sell your products well, no matter where. Now, we have seen the good and bad things of monopolies, and that opinion changes depending on from what side of the coin you are looking at it from, it could either benefit you, or be a really bad thing for you and any other companies that may want to enter any market that has such a strong monopolistic
An oligopoly is an intermediate market structure between the extremes of perfect competition and monopoly. Oligopoly firms might compete (noncooperative oligopoly) or cooperate (cooperative oligopoly) in the marketplace. Whereas firms in an oligopoly are price makers, their control over the price is determined by the level of coordination among them. The distinguishing characteristic of an oligopoly is that there are a few mutually interdependent firms that produce either identical products (homogeneous oligopoly) or heterogeneous products (differentiated oligopoly) (Rajeev K. Goel, 2014, P183) There are two main characteristics of oligopoly, including small number of firms and interdependence. There are only a few manufacturers in the industry.
Restriction or barriers are lesser than monopolistic market. c. Identical or differential products – In this type of market the production is either identical differentiated. d. Government intervention – In oligopolistic market scenario, government plays a big role to ensure businessmen are not allowed to follow illegal ways of influencing rates and
These few firms produce either identical or differently products and entry of new sellers is difficult or impossible. In this market the goods produced and sold are homogeneous or differentiated. If only two firms exist in the market, it is called duopoly. Examples of this market include the market of automobile, cement, television and petroleum. Monopolistic: Monopolistic competition is a market structure in which a large number of sellers sale close substitution products.
In monopolistic competition, the industry consists of many firms competing each other, and each firm practices product differentiation with a product that is slightly different from the products of competing firms. Firms are free to enter and exit the industry. The product differentiation enables firms to compete on product quality, price and marketing. To stay in the industry for a considerable period, the firm must maximize its profit. Because of product differentiation, a firm in monopolistic competition faces a downward-sloping demand curve.