Barriers Of Oligopolistic Competition

Rivalry: If barriers to leaving an industry are high, firms will exhibit greater rivalry and lower prices. High exit barrier forces firm to stay and compete for market share to survive and sustain..

The definition of an oligopoly is the market condition in which the production of identical or similar products is done by a small number of big firms. Oligopolies can be categorized in to two types: homogenous oligopolies where the product is exactly the same (e.g.: steel production)

Factors that can limit the threat of new entrants are known as barriers to entry. In this case barriers to entry are low because: there is no government intervention to prevent businesses from entering the industry, resources are abundant, and customers’ switching costs are low as well as fixed costs to start this type of business.

An Oligopoly refers to a market structure where-by the suppliers have formed some form of cartel and are acting in unison. In such a case the suppliers have the power to determine the price of the commodity and may set any price.

Oligopolistic is a market structure which under the imperfect competition. According to Sloman & Garratt, oligopoly is only few large firms share a large portion of industry and control the market. When we hear that a term about “Big three”, “Big four” or “Big five” it can be set down as oligopolistic industry. In the oligopoly market competition, depends on the firms produce homogeneous or differentiated products and it will be categorize as homogeneous oligopoly or differentiated oligopoly. As Mcconell & Brue, 2008 stated because of the small number of firms, oligopolistic have worthy of consideration command over the prices and they have to think about their competitors conceivable reaction to their product`s price, product`s quality, advertising outlays and so on. The few large firms are interdependent but they have to always be awake of competitor`s action to maintain their firm can stand strong in the industries. Oligopolistic have a strong barriers of entry for the new competitors, which alike and dedicative by the pure monopoly. According to Jackson, Mclver & Wilson stated oligopolistic industries have a large economies of scale have to be consider for the new competitors because they must have a large amount of capital to invest heavy on the technology in the beginning, and this is the prevention of new competitors can easily enter to the industry. Furthermore, there are many industries are counted as oligopolistic for instance mining, steel, soft drinks, airlines,

These business sell the most by the demand of the consumer, this allows the easiest profit for a short run. Oligopoly means that an industry is dominated by a small number of sellers with market power. They can limit and discount competition. A good example are the cell phone companies such as Verizon or Sprint. They are their own competition and the government only regulates them but does not intervene with their sales practices. Monopoly markets used to be the way of the past. Companies had only one provider who offers a good or a service. Monopolies have no one to compete against nor did it allow others to get in the competition race with its product. As a monopoly the company can set price, and who to sell it to. It does not allow others to emulate what it sells. The monopolies don’t have competitors so they mostly maintain their customers. The National Football League is somewhat an example. They have exclusive rights to sell goods, they have no competition and most of the products sold are solemnly offered by or through them. If any other business uses their logo they must pay a fee.

There are different types of market situation a firm has to face which directly affect the price and the quantity demanded and supplied in the economy. The major types of market structures prevalent in the economy are perfect competition, monopolistic market, monopoly, oligopoly and duopoly. Here, in this essay we will be elaborating about three market conditions i.e. monopoly, oligopoly and duopoly where monopoly is characterized by single seller in the market selling unique products with high barriers to entry which makes it difficult or impossible for others firms to enter the market. As a result, firm can enjoy abnormal profit by owning the fundamental resources, licenses and patents that create legal barriers to other

An oligopoly is a market structure characterized by; few firms either standardized or differentiated products, and difficult entry. A key characteristic of oligopolies is that each firm can affect the market, making each firm’s choices dependent on the choices of the other firms. These are known as interdependent. Oligopolies are made up of a small number of mutually interdependent firms. Each firm must take into account the expected reaction of other firms.

The word oligopoly has been coined from the Greek words: “Oligi” means few “polein” means to sell. Thus, Oligopoly is a market scenario which comprises of few sellers (more than 2) of differentiated or homogenous product.

Meaning:- Oligopoly is a common economic system in today’s society. The word “oligopoly” comes from the Greek “oligos” meaning "little or small” and “polein” meaning “to sell.” When “oligos” is used in the plural, it means “few.” Oligopoly is a market structure in which there are a few sellers and they sell almost identical products.

It is quite challenging to know about oligopoly by looking at the market structure of an industry. Sometimes the industry may have some of its subtypes but it may not use it for the profit. For instance, US may have hundreds of airlines but its not necessary that the entire airline in US for the same destination are competing with each other. There could only be one or two major airlines that may compete with each other like American and United.

Barriers to entry are the factors that make it difficult for new firms to enter an industry, which lead to imperfect competition. Mostly commonly known barriers of entry areeconomies of scale, legal restrictions, high cost of entry and advertising and productdifferentiation.

Barriers to entry are obstacles in the way of firms attempting to enter a particular market, which may operate to give established firms particular advantage over investment. They are factors that allow incumbent firms to earn positive economic profits, while making it unprofitable for new comers to enter the industry. Barriers to entry may be structural or strategic. Structural entry barriers result when the incumbent has natural costs or marketing advantages or benefits from favorable regulations. Strategic entry barriers result when the incumbent

Oligopoly is a type of imperfect competitive market, which consists of few large firms. These firms control the market and sell similar product, which are usually differentiated by the brand (e.g. Nike and Adidas).The most important features of oligopoly is the interdependence between firms, which means that the act of a firm will inevitably affect the other firm. However, a firm cannot be sure of how exactly the other firm will respond to their decision, therefore strategic uncertainty may be used as a tactic in oligopoly.

The two primary characteristics of a monopolistically competitive market are (1) that firms compete by selling differentiated products which are highly, but not perfectly, substitutable and (2) that there is free entry and exit from the market. When a new firm enters a monopolistically competitive market (seeking positive profits), the demand curve for each of the incumbent firms shifts inward, thus reducing the price and quantity received by the incumbents.