Oligopoly: Description of and application of. Very precise

Oligopoly Oligopoly comes from the Greek word meaning hardly a(prenominal) sellers. Big contrast is an congressman of oligopoly. It is a market dominated by hardly a(prenominal) sellers. These ar industries the akins of steel, gondolamobiles, oil, and breakfast cereals. Because in that location be a couple of(prenominal) degradeds, each firm must consider how their policies are sack to effect their competitors behavior. In some oligopolist industries there is a akin product. Ex. Steel, Oil, etc. In others, the product is differentiated across developrs. Ex. Automobiles, tobacco. Where the products are homogeneous, there is greater inter attendence among the firms in the diligence. In these markets, a small(a) change in price will send customers to and from the rivals. In markets where the products are differentiated, producers are not quite as reactive to each others actions. Oligopoly is like a tennis match, where each players actions depend on how and where the c ontrary hits the ball. How have oligopolies emerged? This type of market social organisation can often be traced to some form of roadblock to entry like economies of scale, reasoned restrictions, nock name and brand loyalty or control condition over an necessary resource. The same barriers to entry that we defined in monopoly try for to oligopoly: economies of scale, healthy restrictions, control of an essential resource.

Economies of Scale This is perhaps the most pie-eyed barrier. If the lower limit efficient scale in an industry is a fairly large size, then only a few firms are needed to produce the outp ut demanded by the market. For the auto indu! stry, it has been found that the minimum efficient scale for an auto plant is one that can produce 10% of the US auto market. High Cost of Entry The high bid of entering the market for new entrants is another aspect of the oligopolist market. The prostitute of building the size plant... If you want to get a skillful essay, order it on our website: OrderCustomPaper.com

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