This document defines and describes oligopoly, a market form dominated by a small number of interdependent sellers. An oligopoly lies between perfect competition and monopoly. It discusses the characteristics of oligopolies including profit maximization and ability to influence prices. The document also outlines different types of oligopolies such as pure/differentiated and collusive/non-collusive. It provides examples of oligopolies in industries like petroleum, telecommunications, and banking.
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Oligopoly Market Definition and Characteristics
1.
2. DEFINATION
• Oligopoly :- An oligopoly is a market form in
which a market or industry dominated by a
small numbers of sellers.
OR
Oligopoly is a situation where a few large
firms compete against each other and there is
an element of interdependence in decision
making of these firms.
3. • 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.
4. TYPES OF OLIGOPOLY MARKET
A. Pure and differentiated
oligopoly market
B. Collusive and non-collusive
oligopoly
5. • PURE OLIGOPOLY :- Pure oligopoly refers to
market where all the firms are producing
homogenous product. There is no any kind of
differences. Here all products are perfectly
substitutable.
• Differentiated oligopoly:- An oligopoly market is
said to be differentiated oligopoly when the
products produced by firms having some kind of
differences. It is also called imperfect market.
6. • COLLUSIVE OLIGOPOLY :- If the firms in
oligopoly market are functioning on the basis
of an agreement between them , it becomes a
collusive oligopoly.
• NON-COLLUSIVE OLIGOPOLY :- Where there is
no any kind of agreements and conducts
between the firms. Each firms running on the
basis of the policies themselves.
7. CHARACTERISTICS
• Profit maximization
• Ability to set price
• Entry and exit
• Number of firms
• Long run profits
• Product differentiation
• Perfect knowledge
• Interdependence
• Non-price competition
8. MAIN FEATURES OF OLIGOPOLY
• Small number of firms
• Interdependence
• Cooperation
• Presence of monopoly element
• Advertising
9. 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.
10. MODELS OF OLIGOPOLY MARKET
• COURNOT-NASH MODEL
• BERTRAND MODEL
• KINKED DEMAND CURVE MODEL
11. SOME EXAMPLES
1. IN INDIA :- The petroleum and gas industries ,
telecommunication , cement industry.
2. IN CANADA :- 7 companies that control banking
industries in canada are-Royal bank of
canada,Bank of nova scotia,Bank de montreal,
Canadian imperial bank of commerce,
Desjardins group and Banque nationale du
canada.
3. WORLDWIDE:-Microsoft,Sony, and Nintendo
dominate the video game console market.