Oligopoly is a market structure in which a few firm dominate the industry, it is an industry with a 5 firm concentration ratio of greater than 50%. In Oligopoly, firms are interdependent; this means their decisions (price and output) depend upon how the other firms behave: •Barriers to entry are likely to be a feature of Oligopoly •There are different models to explain how firms may behave The kinked demand curve model suggest firms will be profit maxi misers. Kinked Demand Curve Diagram
Words: 676 - Pages: 3
Monopoly is a term used by economists to refer to the situation in which there is a single seller of a product (i.e., a good or service) for which there are no close substitutes. The word is derived from the Greek words monos (meaning one) and polein (meaning to sell). Governmental policy with regard to monopolies (e.g., permitting, prohibiting or regulating them) can have major effects not only on specific businesses and industries but also on the economy and society as a whole. Two Extreme
Words: 1742 - Pages: 7
CHAPTER 25 Monopolistic Competition and Oligopoly A. Short-Answer, Essays, and Problems 1. What are the major features of monopolistic competition compared to pure competition and pure monopoly? 2. “Pure competition or pure monopoly industries will tend to be one-price industries. Monopolistic competition, however, is a multiprice industry.” Explain. 3. How does economic rivalry take place in monopolistic competition? Describe the different aspects of
Words: 9581 - Pages: 39
Trask Abstract Before someone can identify how to maximize profits in different market structures they must first understand how those markets operate and the characteristics of each. This paper will identify three market structures monopoly, oligopoly, and competitive structures and explain each in detail, as they pertain to maximizing profits, how price is determined for goods, how output of goods is determined, barriers of entry into each market, and the role that each market plays in the economy
Words: 1106 - Pages: 5
Date: 24 January 2010 Topic: Market Structure Written by Kevin Discuss whether this model of market structure (oligopoly) is the most appropriate to explain the behavior of firms in Singapore. [15] Firms’ behaviours can largely be explained by the market structures they exist in as the number of players in the market and the kind of goods would determine the behaviours of the firms. In Singapore, the firms that dominate the economy are largely service industries as well as global firms that are
Words: 692 - Pages: 3
Oligopoly in business can be described as when few firms between them share a large proportion of the industry. In the essay I will examine the economics literature on tacit collusion in oligopoly and why firms are tempted to collude. I will provide benefit of collusion and legal literature regarding collusion. Some of the best know companies are oligopolists, including Coca-Cola, Pepsi, British Airways, and Virgin Atlantic Airways. There are however, significant difference in the structure of industries
Words: 1643 - Pages: 7
Operations Decision Dr. Izzeldin Bakhit ECO 550 Managerial Economics and Globalization March 3rd, 2014 Operations Decision There are a lot of frozen food and low calorie microwavable food options available in the market. A few years ago people were not able to purchase the microwavable food but with the increase in income, people can now afford an easier lifestyle and can change the way they cook breakfast, lunch, and dinner. Because microwavable food easy to cook, people are replacing
Words: 1508 - Pages: 7
the price that yields the largest possible profit. (Stigler, 2013) What is an Oligopoly? Oligopoly is an industry can only have a handful of large firms; it makes it very difficult for new firms to enter into the industry. The firm products can be similar or different, but the action of one firm will impact others in the oligopoly. (Wessels, 2000) What is a Cartel? A Cartel is a group of firms in an oligopoly that get together and agree to cooperate to the detriment of consumers and other
Words: 936 - Pages: 4
Evaluate the effectiveness of monopolistic competition and oligopolies in meeting the needs of producers and consumers. A market is a place where buyers and sellers meet to exchange money for goods and services. There are four market structures; perfect competition, monopolistic competition, oligopoly and monopoly. Each structure of market operates in their own ways with each with their own characteristics; each structure has its own number and size of the firms, the level of the competition,
Words: 608 - Pages: 3
Monopolistic Competition is a market structure in which there are several or many sellers; each produce similar, but slightly differentiated products. Differentiation can be on the basis of colour, design, size, taste, fragrances, etc. Each producer can set its price and quantity without affecting the marketplace as a whole. Wikipedia explains the concept as, “A common market form. Many marketers can be considered monopolistically competitive, often including the markets for restaurants, cereal
Words: 406 - Pages: 2
