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Compose a 750 words essay on Market Structures. Needs to be plagiarism free!An oligopoly, on the other hand is a market situation where there are few competitors in the market, but each competitor is
Compose a 750 words essay on Market Structures. Needs to be plagiarism free!
An oligopoly, on the other hand is a market situation where there are few competitors in the market, but each competitor is large enough to affect the market price. The concentration of power rests on a few players now, rather than just one. And like in the case of the monopolist, while there is competition already, each player still has enough power to curb production, affect quantity of output or raise prices.
While there has been a very fine line between an oligopoly and cartel, the difference lies between the formalization of groups that comprise the competition to serve a common purpose. In an oligopoly, the individual players have enough power to affect prices in the market. When these players form a group of a common purpose in order to regulate the supply in a certain market, thus actively controlling the price it becomes a cartel. The difference between an oligopoly and a cartel lies in forming an association between the players to limit the competition.
An example of a monopoly is a power distribution company that serves a certain area. Monopolies of these sorts are apparent in networks, in order to ensure a certain level of supply to keep prices from fluctuating and hurting consumers.
The telephone service industry is an example of oligopoly. The players in the industry can affect the market price of various telephone services by preempting to control prices of a service, which could lead the other competitors to either follow or counter the attack.
The Organization of Petroleum Exporting Countries is a good example of a cartel. In order to regulate the supply in the oil market, these countries form in order to produce a quota, or certain amount of supply in accordance to their contribution to the supply target of the cartel.
Monopolies and oligopolies over time accumulate as much resources that are enough to fund breakthrough scientific discoveries and research and
