OLIGOPOLY
PRESENTED BY
AMERESH SETHI
ARPITA GAIKWARD
CHETAN CHAVHAN
DIMPLE RAMNANI
CONTENTS
• INTRODUCTION
• FEATURES
• KINKED DEMAND CURVE
• CASE STUDY
INTRODUCTION
• This is a market situation where
there are more than 2 producers of
a product.
• When there are two produce...
INTRODUCTION
• When you do a study of the detailed
features we can relate to the real
life market structures.
• It is an i...
INTRODUCTION
• Based on these criteria oligopoly
enjoys substantial market power,in
this market condition, a few firms
dom...
FEATURES OF OLIGOPOLY
1.Number of producers : There are
very few producers in an oligopoly.
The market is shared among a f...
FEATURES OF OLIGOPOLY
3.Product Differentiation: The
producers in an oligopoly market
compete on the basis of product
diff...
FEATURES OF OLIGOPOLY
5. Group Behavior and
interdependence :
6. The oligopolistic faces an
indeterminate demand curve:
Th...
KINKED DEMAND CURVE
• The Kinked Demand Curve The
demand curve under oligopoly is
indeterminate.
• This is due to the inte...
KINKED DEMAND CURVE
KINKED DEMAND CURVE
• Suppose Nokia reduces its price to
Rs. 900. This may increase the
sales, depending on the response o...
KINKED DEMAND CURVE
• But if the prices are reduced it
leads to similar reactions from
rival forms.
• Various factors have...
CASE STUDY OF GE
CASE STUDY OF AVIATION
INDUSTRY
Oligopoly
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Oligopoly

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Oligopoly

  1. 1. OLIGOPOLY PRESENTED BY AMERESH SETHI ARPITA GAIKWARD CHETAN CHAVHAN DIMPLE RAMNANI
  2. 2. CONTENTS • INTRODUCTION • FEATURES • KINKED DEMAND CURVE • CASE STUDY
  3. 3. INTRODUCTION • This is a market situation where there are more than 2 producers of a product. • When there are two producers, it is called duopoly, which is also an imperfect market situation and so a special case of oligopoly. • The number of producers in oligopoly are lesser than that of perfect competition and
  4. 4. INTRODUCTION • When you do a study of the detailed features we can relate to the real life market structures. • It is an imperfect market with few sellers of similar or differentiated products. • The few firms in oligopoly enjoy a high degree of market power. • The market power depends on the number of sellers, barriers to
  5. 5. INTRODUCTION • Based on these criteria oligopoly enjoys substantial market power,in this market condition, a few firms dominate. • Based on these criteria oligopoly enjoys substantial market power, in this market condition, a few firms dominate. • Tyre manufacturers- Dunlop, firestone, dominate.
  6. 6. FEATURES OF OLIGOPOLY 1.Number of producers : There are very few producers in an oligopoly. The market is shared among a few producers. Example of homogeneous products - steel, coal, copper. The producers of these products compete on the basis of differences in product like- different packaging,colour, flavour. 2. Huge Investments to Start
  7. 7. FEATURES OF OLIGOPOLY 3.Product Differentiation: The producers in an oligopoly market compete on the basis of product differentiation, which is a distinguishing feature of oligopoly. 4. Advertising : In oligopoly market situation, the producers are forced to advertise their product . Aggressive advertising measures are undertaken with a view to capture
  8. 8. FEATURES OF OLIGOPOLY 5. Group Behavior and interdependence : 6. The oligopolistic faces an indeterminate demand curve: There is a lot of interdependence among the oligopoly producers. Producer Output Market share Nokia 8000 40% Samsung 6500 32.5% L.G. 5500 27.5%
  9. 9. KINKED DEMAND CURVE • The Kinked Demand Curve The demand curve under oligopoly is indeterminate. • This is due to the interdependence of the oligopoly producers. Let us examine what happens if a producer under oligopoly reduces the price. • In an oligopoly situation, an oligopolistic can expect three kinds of reactions if the price is
  10. 10. KINKED DEMAND CURVE
  11. 11. KINKED DEMAND CURVE • Suppose Nokia reduces its price to Rs. 900. This may increase the sales, depending on the response of the oligopolists. If nobody responds, the oligopolist can go to point D. • What happens point D? At this point Nokia will be able to sell more hand sets. What will happen to the other companies, Samsung and L.G.?
  12. 12. KINKED DEMAND CURVE • But if the prices are reduced it leads to similar reactions from rival forms. • Various factors have to be considered by a producer , when he goes ahead with the decisions to reduce price spend money on advertising his product or taking investment decisions. • The firms are involved in strategy
  13. 13. CASE STUDY OF GE
  14. 14. CASE STUDY OF AVIATION INDUSTRY

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