GROUP 5 & 6, CLASS D, AGRIBISNIS 2012

GROUP 5&6

OLIGOPOLY MARKET

Oligopoly market:

1.market structure that consists of only some manufacturers between 2-10 companies.

2.the number of companies that dominate the market, more than two but not many (oligos = few) so the action of a single entrepreneur will affect policy from other entrepreneurs.

3. a. pure oligopoly

b. differentiated oligopoly

a. consists of several giant companies that controls more much of the market (70-80%) from the total production or value sales, and in addition there are also be some small companies. Some the company greatly influence each other.

b. mutual independence

There are some sellers Goods that sold are homogeneous or

shades different New company diffucult to enter Requires advertising There is a market leader The selling price is not easily changed

CHARACTERISTICS OF OLIGOPOLY MARKET

KINDS OF OLIGOPOLY MARKET

Pure Oligopoly: product sthat solds on oligopoly markets are similar Example: cement market, manufacturers of gasoline.

Differential Oligopoly: Goods that are solds can be distinguished. Example: car market, the motorcycle market.

ADVANTAGES OF MARKET OLIGOPOLY

encourage the development of technology and innovation

Giving freedom of choice for buyers. Being able to do research and product

development. More attention to customer satisfaction

because of the seller competition. The implementation of new technologies.

DISADVANTAGES OF MARKET OLIGOPOLY

lack of efficiency in use of resources Creating imbalance income

distribution. Stable prices are too high and could

encourage the emergence of inflation. Could arise exploitation of buyers and

owners of factors of production.1. The new company difficult to penetrate

/ enter2. Can evolve towards monopoly.

CHARACTERISTICS OF OLIGOPOLY MARKET

A large number of dominant firms, with some of the other small

A standardized and differentiated products The power of dominant firms on prices,

but the fear of retaliation The power of dominant firms on prices,

but the fear of retaliation The use of non-price competition due to

extensive ketakutanakan price war

Oligopoly Market Properties

- Prices of products sold relatively the same- A superior product differentiation is the key to

success- It is difficult to enter the market because it

takes a great resource- Changes in prices will be followed by other

companies

CAUSES OF OLIGOPOLY POOLED

Economies of scale in the production of certain goods

Business cycles that eliminate weaker competitors

The advantages of the companies that joined

other barriers such as the development of technology and advertising

Kinked demand curve under oligopoly

An oligopolist faces a downward sloping demand curve but the elasticity may depend on the reaction of rivals to changes in price and output. Assuming that firms are attempting to maintain a high level of profits and their market share it may be the case that:

(a) Pesaing tidak akan mengikuti ketika harga dinaikkan oleh suatu perusahaan – Karenanya demand akan relatif elastis dan peningkatan harga ini akan sangat menjatuhkan penerimaan perusahaan (b) Pesaing lebih suka menyesuaikan harga (harga diturunkan) untuk menjaga market sharenya ketika suatu perusahaan menjatuhkan harga. Jika hal ini terjadi, permintaan akan menjadi lebih elastik dan jatuhnya harga juga akan menyebabkan jatuhnya total penerimaan.

KURVA PATAH DALAM PASAR OLIGOPOLI

The kink in the demand curve at price P and output Q means that there is a discontinuity in the firm's marginal revenue curve.

If we assume that the marginal cost curve in is cutting the MR curve then the firm is maximising profits at this point.

In the bottom diagram, we see that a rise in marginal costs will not necessarily lead to higher prices providing that the new MC curve (MC2) cuts the MR curve at the same output. The kinked demand curve theory suggests that there will be price stickiness in these markets and that firms will rely more on non-price competition to boost sales, revenue and profits

KINKED DEAND CURVE

DANKE SEHON