Oligopolies in the United States Economy

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There are many models of market structure in the field of economics. They include perfect competition on one end, monopoly on the other end, and competitive monopoly and oligopoly somewhere in the middle. In this paper, we will focus on the oligopoly structure because it is one of the strongest influences in the United States market. Although oligopolies can also be global, we will focus strictly on the United States here. We will define oligopoly, give key characteristics important to the oligopoly structure, explain why oligopolies form, then give an example of an oligopoly in today’s economy. Finally, we will discuss the benefits and costs in this type of market structure. Oligopoly is defined as a market structure in which there…show more content…
Dew, Mt. Dew Code Red Sundrop Vault, Fresca, Pibb Canada Dry, Schweppes Coca Cola products price: $1.79 Pepsi co products price: $1.69 Dr. Pepper products price: $1.79 *prices are non-sale prices for a 2 liter bottle, obtained from Shaw’s Supermarket, Auburn, MA on June 17, 2010. As supported by these data, the carbonated soft drink industry clearly fits into the category of an oligopoly market structure. Finally, you may be asking “Are oligopolies harmful or beneficial to the consumer?” There are some economists who view oligopolies as negative, stating that they artificially inflate prices and inhibit healthy competition between companies. They claim oligopolies are one step away from monopolies, and that without restriction placed upon their activities, oligopolists will tend toward monopolistic price fixation. However, these statements are normative, and completely unfounded. The fact is that firms do not strive to be monopolies. They prefer some healthy competition. It keeps them current and innovative, and provides the framework for cutting costs, finding more efficient production methods and developing new products. Most importantly, it keeps them out from under government scrutiny, as a monopoly would be. Consumers benefit from this in the form of lower prices and more variety. In fact, as you look at our current economy, you can see these points supported everywhere. First, the competition

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