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OLIGOPOLY & MONOPOLISTIC COMPETITION

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OLIGOPOLY & MONOPOLISTIC COMPETITION

  1. 1. OLIGOPOLY & MONOPOLISTIC COMPETITION
  2. 2. OLIGOPOLY <ul><li>INTRODUCTION </li></ul>
  3. 3. Meaning of Oligopoly <ul><li>Oligopoly refers to a market situation where there are a few sellers (2 to 10) in a market, selling homogeneous or differentiated products. </li></ul>
  4. 4. Characteristics of Oligopoly <ul><li>Few Sellers. </li></ul><ul><li>Homogeneous or Differentiated Products </li></ul><ul><li>Interdependence </li></ul><ul><li>High Cross Elasticities </li></ul><ul><li>Importance of Advertising and selling costs </li></ul><ul><li>Competition </li></ul>
  5. 5. Characteristics of Oligopoly <ul><li>Different Size </li></ul><ul><li>Group Behavior </li></ul><ul><li>Uncertainty </li></ul><ul><li>Price Rigidity </li></ul><ul><li>Indeterminate or Kinked Demand Curve </li></ul>
  6. 6. Various Types of Oligopoly Markets <ul><li>Price War </li></ul><ul><li>Collusion </li></ul><ul><li>Price Leadership </li></ul><ul><li>Game Theory </li></ul><ul><li>Non-price Competition </li></ul><ul><li>Secret Price Concessions </li></ul>
  7. 7. Kinked Demand Curve Model Of Price Rigidity <ul><li>“ Each Oligopolist believes that if he lowers the price below the prevailing level, his competitors will follow him and according lower their prices, whereas if he raises the price above the prevailing level, his competitors will not follow his increase in price.” </li></ul><ul><li>Price Reduction </li></ul><ul><li>Price Increase </li></ul>
  8. 8. Criticisms Of Kinked Demand Theory <ul><li>The reason, Why the kinked demand model can be viewed as incomplete </li></ul><ul><li>Stigler's test on Kinked Demand Theory </li></ul><ul><li>Leadership and Price Rigidity </li></ul><ul><li>Explanation for Price Rigidity </li></ul><ul><li>Sweezy’s Kinked Demand Curve Theory </li></ul>
  9. 9. Monopolistic Competition <ul><li>INTRODUCTION </li></ul>
  10. 10. Meaning of Monopolistic Competition <ul><li>Monopolistic competition is a blending of monopoly and competition. It is a market situation where there are many producers having keen competition among them and also some degree of monopoly power because of differentiated products. </li></ul>
  11. 11. Characteristics or Features of Monopolistic Competition <ul><li>Large number of buyers and sellers </li></ul><ul><li>Free entry and exit </li></ul><ul><li>Product differentiation </li></ul><ul><li>Selling Costs </li></ul><ul><li>Concept of group </li></ul>
  12. 12. Monopolistic Competition in the Short Run
  13. 13. Monopolistic Competition in the Long Run
  14. 14. Product Adjustment And Individual Equilibrium
  15. 15. Selling Costs <ul><li>Informative or Promotional Advertisement </li></ul><ul><li>Manipulative Advertisement </li></ul>
  16. 16. Average Selling Costs Curve (ASC)

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