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.
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.
Market Structure - Oligopoly Oligopoly is a market structure whereby a few number of firms owns a lion’s share in the market. This market structure is similar to monopoly, except that instead of one firm, two or more firms have control in the market. In an oligopoly, there are no upper limits to the number of firms, but the number must be nadir enough that the operations of one firm remarkably influence and affects the others (Investopedia, 2003). The Walt Disney Company is categorized under an oligopoly market structure. Participation of very few firms in this market is the cause for Disney to be an oligopoly.
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.
One well known reason for monopolies is when producers and manufacturers what a patent or a copyright in a product or specific ideas, which is the case with the iPhones from Apple, their well known track pad is subject of a patent, so that means that their competitors cannot use that specific function in their devices. There are many more examples with things related with images, sounds, even colors, like some of the most famous companies have specific colors that the population associate with their specific company, such is the case with McDonald’s red and yellow logo, or even the unique “M” that they use. Another example could be Disney’s “D” and its font type. Of course lots of people in different countries still use some of the characteristics of different companies that own them and have to remain vigilant that it is not found out, since they could be eligible for a corporative class
The peculiarity lay in the fact that an industry of this kind would not have been able to survive but it managed to, and even had a large market share in the transport industry. This is an attempt to understand how an oligopoly of such magnitude manages to function in India and whether it is a welfare model which caters to the needs of society at large. WHAT IS AN OLIGOPOLY? As was very aptly defined by P.C. Dooley “An oligopoly is a market of only few sellers, offering either homogenous or differentiated products.
Nowadays, advertisements are considered the most important and effective tool to make people understand about the product that may be entered or have entered into the market. The world dynamics have changed completely. Today, no brand can assure sales and profits without clear advertisements and
serve basic social and economic needs. Social advertising approach is used for informing, educating and persuading the society on basic issues. In the situation of social problem, advertising can play a key role and can help in social encourage and change. If today we are aware about family planning, AIDS, Iodized Salt, Pulse Polio, Cancer, TB, Drinking Water, reduction of Superstition etc. it is due to effective role of social advertising.
LIMITATIONS OF ADVERTISEMENT According to the critics, advertising has the following disadvantages: (1) Adds to Costs: An organisation has to spend large amount on advertising. It increases the cost of the products. To meet this expenditure, price of the product is raised. No manufacturer pays for the advertising expenses out of his pocket. Advertising, therefore, leads to unnecessary rise in prices.
Any oligopoly form of Market is where there is large number of buyer but few sellers present. They are selling a homogeneous or unique product. There are barriers to entry and exit in such type of a market form. Also, since barriers to entry are high, firm can earn super normal profit in the long run. Also the firms in oligopoly are Price setter, and not Price takers.