faces a demand curve that is inelastic throughout the range of market demand.
faces a perfectly inelastic demand curve.
is a price maker.
is also able to dictate the quantity purchased
Economics 102 Micro Price theory through collusion agreements between the parties in the same industry
Yes, competitors are 'a few' being Exxon Mobil, BP etc. Oligopolies usually have high barriers to entry, have strong control over pricing, some control over price, and advertise aggressively. They also have a 'kinked' demand curve.
AR=MRnormal profits in the long runlarge number of sellersfree entry and excit ,as there are no barriersthe seller is only the price takerperfectly elasticeach firm is a part of the industry
At profit maximization, marginal cost equals marginal revenue. Price will be higher than marginal cost.
Pure competition
They would prefer to be a price setter. This would imply control over the price. In some models this is a monopoly or an oligopoly. (As a side note, in the real world, EVERY firm has some control over the price of their good no matter how small that control may be, but this answer refers to models.) The technical reason for this is because in an economy in which firms are price takers, firms produce at the level where their Marginal Revenue equals Marginal Cost, but Marginal Revenue is set (it's the price. In a perfectly competitive economy it's also the minimum of the Average Variable Cost curve). So they can only vary their Marginal Cost by changing how much they produce. In a price setter economy, the price curve is changeable by the price setting. They will also produce where MR = MS, but they will produce a lesser quantity of goods because this artificial shortage will raise the price. This ALWAYS results in a higher profit than in a competitive economy.
Yes, competitors are 'a few' being Exxon Mobil, BP etc. Oligopolies usually have high barriers to entry, have strong control over pricing, some control over price, and advertise aggressively. They also have a 'kinked' demand curve.
http://www.answers.com/library/Investment%20Dictionary-cid-57121 Oligopoly A situation in which a particular market is controlled by a small group of firms.An oligopoly is much like a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market.Investopedia Says:The retail gas market is a good example of an oligopoly because a small number of firms control a large majority of the market.
AR=MRnormal profits in the long runlarge number of sellersfree entry and excit ,as there are no barriersthe seller is only the price takerperfectly elasticeach firm is a part of the industry
At profit maximization, marginal cost equals marginal revenue. Price will be higher than marginal cost.
Pure competition
They would prefer to be a price setter. This would imply control over the price. In some models this is a monopoly or an oligopoly. (As a side note, in the real world, EVERY firm has some control over the price of their good no matter how small that control may be, but this answer refers to models.) The technical reason for this is because in an economy in which firms are price takers, firms produce at the level where their Marginal Revenue equals Marginal Cost, but Marginal Revenue is set (it's the price. In a perfectly competitive economy it's also the minimum of the Average Variable Cost curve). So they can only vary their Marginal Cost by changing how much they produce. In a price setter economy, the price curve is changeable by the price setting. They will also produce where MR = MS, but they will produce a lesser quantity of goods because this artificial shortage will raise the price. This ALWAYS results in a higher profit than in a competitive economy.
A true duopoly is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market. In the field of industrial organization, it is the most commonly studied form of oligopoly due to its simplicity.
Total control, as there is no competition the monopoly vendor can ask any price they wish. That is why monopolies are bad for society and Governments have to intervene in the capitalistic market.
No. It gave oil exporting countries more control over prices.
What they were usually after was price control and thus maximizing profits through market control.
government want to statutory control over price of some specific commodity
Its sounds like either your asking about a "category killer" or a "monopoly" Most likely you are describing an "oligopoly".