Download - Oligopoly
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DEFINATION
• Oligopoly :- An oligopoly is a market form inwhich a market or industry dominated by asmall numbers of sellers.
OR
Oligopoly is a situation where a few largefirms compete against each other and there isan element of interdependence in decisionmaking of these firms.
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• Oligopoly lies between perfect competition and monopoly.
• Few number of companies in the market.
• Produce identical products and compete on price, product, quantity and marketing.
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TYPES OF OLIGOPOLY MARKET
A. Pure and differentiated
oligopoly market
B. Collusive and non-
collusive oligopoly
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• PURE OLIGOPOLY :- Pure oligopoly refers tomarket where all the firms are producinghomogenous product. There is no any kind ofdifferences. Here all products are perfectlysubstitutable.
• Differentiated oligopoly:- An oligopoly market issaid to be differentiated oligopoly when theproducts produced by firms having some kind ofdifferences. It is also called imperfect market.
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• COLLUSIVE OLIGOPOLY :- If the firms inoligopoly market are functioning on the basisof an agreement between them , it becomes acollusive oligopoly.
• NON-COLLUSIVE OLIGOPOLY :- Where there isno any kind of agreements and conductsbetween the firms. Each firms running on thebasis of the policies themselves.
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CHARACTERISTICS
• Profit maximization
• Ability to set price
• Entry and exit
• Number of firms
• Long run profits
• Product differentiation
• Perfect knowledge
• Interdependence
• Non-price competition
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MAIN FEATURES OF OLIGOPOLY
• Small number of firms
• Interdependence
• Cooperation
• Presence of monopoly element
• Advertising
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BARRIERS TO ENTRY
1. NATURAL BARRIERS TO ENTRY :- When the market is not big enough for more firms.
2. LEGAL BARRIERS TO ENTRY :- occurs when a legal barrier protects a small number of companies.
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MODELS OF OLIGOPOLY MARKET
• COURNOT-NASH MODEL
• BERTRAND MODEL
• KINKED DEMAND CURVE MODEL
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SOME EXAMPLES
1. IN INDIA :- The petroleum and gas industries ,telecommunication , cement industry.
2. IN CANADA :- 7 companies that control bankingindustries in canada are-Royal bank ofcanada,Bank of nova scotia,Bank de montreal,Canadian imperial bank of commerce,Desjardins group and Banque nationale ducanada.
3. WORLDWIDE:-Microsoft,Sony, and Nintendodominate the video game console market.
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BY:- HARSH PANDEY AND ARVIND TANWAR