Oligopoly

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Oligopoly

  1. 1. OLIGOPOLY
  2. 2.  Few firms dominate the market  Each firm produces big portion of the total industry output. Products are identical or differentiated  Identical e.g.  Steel, lead, cement & other raw materials  Differentiated e.g.  Finished goods like typewriter, airplanes, locomotives, cars & sewing machine There is a price agreement among the producers to promote their own economic interests. The entry of new competition in the market is difficult. There is strong advertising among those who produce differentiated products.
  3. 3. DETERMINANTS OF MARKET STRUCTURE
  4. 4. Government laws and policies In some industries, the government controls the degree of competition in the interest of the economy and the consumers.
  5. 5. Technology For quit some time, certain firms, have enjoyed their business positions as monopolists. In fact, they have reaped great economic portions as the only suppliers of products which did not have competition.
  6. 6. Business Policies and Practices The presence of giant firms discourage the entry of new firms with little resources. In some cases, the bigger firms resort to cut-throat competition which is an unfair business practice to drive away their competitors.
  7. 7. Economic Freedom The existence of economic freedoms like the right to own private properties, the right to engage to any lawful business, the right to accumulate income and other similar economic freedoms associated with a free-enterprise economy have some how change the market structures.
  8. 8. PRICE AND OUTPUT DETERMINATION
  9. 9. Pure Competition The demand curve of an individual firm under a purely competitive industry is perfectly elastic. This is the increase or decrease of the output of a single seller has no effect on the total supply anf market price.

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