Oligopoly: Monopoly and Demand Curve

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An oligopoly describes a market situation in which there are limited or few sellers. Each seller knows that the other seller or sellers will react to its changes in prices and also quantities. This can cause a type of chain reaction in a market situation. In the world market there are oligopolies in steel production, automobiles, semi-conductor manufacturing, cigarettes, cereals, and also in telecommunications. Often times oligopolistic industries supply a similar or identical product. These companies tend to maximize their profits by forming a cartel and acting like a monopoly. A cartel is an association of producers in a certain industry that agree to set common prices and output quotas to prevent competition. The larger the…show more content…
Microsoft knows that they have control over the other companies and uses that to their advantage. Over the past few months there has been talk about dismantling Microsoft Corporation. The U.S. Justice Department has mentioned a breakup of Microsoft, which would help destroy their monopoly in the computer industry. However, some people still have concern about the disruption of Microsoft and its effect on the computer industry, which has largely thrived and operated on Microsoft 's standard. Today the phone industry, once the biggest monopoly in U.S. history, is evolving into an oligopoly consisting of three or four huge carriers. Their intent is to offer an impressive array of long-distance, local, Internet, and wireless services to consumers and businesses. An example would be that of MCI WorldCom Inc. which has recently reached an agreement to acquire Sprint Corp for an estimated $115 billion in stock. This deal between MCI WorldCom and Sprint represents the largest takeover in history, and would create the world 's biggest telecommunications company. This deal brings together the second and third largest long distance carriers in the U.S. with an estimated annual revenue of about $50 billion. The companies would have 30% of the consumer long-distance market, with more than 30 million long-distance customers and a global reach from the U.S. to Europe and Asia. The new company, which is going to be called WorldCom, would
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