Oligopoly

An oligopolistic market is one that has several dominant firms with the power to influence the market they are in; an example of this could be the supermarket industry which is dominated by several firms such as Tesco, Sainsbury’s, and Waitrose etc... Furthermore an oligopolistic market can be defined in terms of its structure and its conduct, which involve various different aspects of economics.

Prior to the American Era of Industrialization, the American Civil War had just taken place that gave the Northern Economy war profits that were eventually invested into industrialization. However, the Age of Industry, in the United States, was extremely harmful to the nation, due to the fact that the idea of Social Darwinism arose, there was corruption within the government, and monopolies began arising which had a negative effect on the the economy and the working class. Monopolies, in the industrial period, had a negative impact across the nation due to the fact that monopolies made life difficult for the arising middle class, economically speaking. Document 1 illustrates perfectly how monopolies made life difficult for the working class

equilibrium. The new company is now run as a monopoly, and this paper shall explain

1) An Oligopolistic market structure is a structure where very few large businesses sell a particular standard Good or differentiated Good, and to whose market entry proves difficult. This in turn, gives little control over product pricing because of mutual interdependence (with the exception of collusion among businesses) creating a non-price competition meaning they are the ‘price setters’. A good rule to help classify an

An oligopoly is “a market situation in which relatively few sellers [like Burger King, McDonald’s] compete and high start-up costs form barriers to keep out new competitors [like Five Guys Burgers and Fries]” (Boone and Kurtz, 2012, p. 80). Within this competitive fast food burger industry, the main product being offered is a hamburger.

Oligopolies are a type of market structure evident in Australia, which is comprised of 2 or more firms having a significant share of the market. In an oligopoly the few firms sell similar but differentiated or homogenous products and is characterised by a large number of buyers making it a form of imperfect competition. This market structure is evident through the Big Four Banks, Phone Industry - Vodafone, Optus and Telstra.

Oligopolies have been around ever since there is trade. However, it has only recently gained grounds in this age of globalisation. Never before has oligopolistic competition been so fiercely contested across so many industries.

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.

Monopolistic competition and Oligopoly are considered imperfectly competitive markets that are a result of few to many firms offering differentiated products. Differentiation of products impede substitution, which allow producers to earn higher than normal profits and thereby enhance shareholder wealth (Byrd, J., Hickman, K., & McPherson, M., 2013). Oligopolies are highly interdependent, with actions of one firm will resulting in a reaction from another. The interdependence results in higher efficiency as a necessity to compete with rivals. According to Claessens "greater development, lower costs, enhanced efficiency and a greater and wider supply resulting from competition will lead to greater [financial] access (2009).

Since colonial times, monopolies have been present in the United States’s economy. But as always, with time comes change, and that situation directly applies to the monopolies in this country. A monopoly is defined as the exclusive control of a commodity or service in a particular market, or a control that makes the manipulation of prices possible. Monopolies had a negative impact on the United States due their unfairness to consumers and laborers, they don’t allow for innovation, and they stifle all competition.

To examine if a market is oligopoly market, it has to meet the following conditions:

•Oligopoly: This is an industry with very little firms in the market. If they conspire, they weaken output and raise profits the way a monopoly would and should do. For example the mobile phone industry is an oligopoly what with so many companies for example Apple, LG and Samsung all competing together. Supermarkets are oligopoly’s as they make supernormal profits as well.

Oligopolistic Markets are less common, but still prevail in the modern economy. An Oligopolistic business is one with few competitors, basing its revenue off of “outsmarting” its opponents by analyzing their decisions and predicting the outcome. Having an analysis of an opponent provides the basis for Oligopoly, as income is based on providing a product that has more features than another product, released to the public around the same time. The Cellular industry provides a pristine example of the Oligopolistic Market.

“An observation made of oligopolistic business behaviour in which one company, usually the dominant competitor among

Firms' Incentives to Avoid Price Competition in Oligopoly Markets In the UK a few, large firms dominate most industries. These industries are known as oligopoly markets. Oligopoly markets are an example of imperfect competition. It consists of a market structure in which there is a small number of large firms in the industry hence is relatively highly concentrated.