Oligopoly And Rigidity

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Rigidity in Price: There is little or no change in prices as the market structure is modelled on this aspect of rigidity. Such changes result in change of market shares and disrupt the co-ordinated functioning of the firms. However, this said, it is well known that power often determines the functioning of an oligopoly. Players which have influence and monetary worth can manipulate the working of the market in order to suit their needs thus making them price makers instead of price takers.
Non-price factors: The rigidity in prices prevents any firm from increasing prices therefore, the firms adopt other competitive practices to have an upper hand in the market. This involves heavy advertising strategies with pamphlets, flyers, commercials and newspaper advertisements. It also includes placing beneficial offers on products in order to attract customers. This proves to be useful when market share has to be diverted in favour of a firm.
Oligopolies are characterised by stiff competition and can be seen as a market forms which witness demand fluctuations based on very minute factors. Thus, advertising and beneficial schemes often determine the popularity of such firms. Airline tickets are often booked on websites which have fixed plans which provide
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The pricing leans in favour of the owners of the resources. Ideally, this would make it less affordable for the customers and thus, result in loss of customers. However, it has been seen that despite this feature this model exists and operates successfully. The reason for this is that the product offered by the firms operating in such models is unique and this gives the firms control over the behaviour of the market. For instance, the airline industry offers air travel which reduces time severely and offers a quality of transport which is unique in

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