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How is an oligopoly different from monopoly?
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
How monopolistic competition like perfect competition?
Monopoly is a market structure where single seller sell its goods and service to large number of buyer. Monopoly firms itself industry because in monopoly only one seller are exists in market. Monopolistic market structure reflect the market situation where large no. of buyer and seller are enjoying. The main similarities between monopoly and monopolistic competition are as follow:- . 1) Both market are price maker i.e. price and level of output is decided by firm itself. 2) Large number of buyer are present in the market. 3) Product differentiated on the basis of size, brand, packing feature etc.
Compare and contrast perfect competition and monopolistic competition?
This is a rather common question within the Market Structure topic in Economics. In Market Structure, the Perfect Competition (PC) and the monopoly are considered extreme market structures, while other market structures also exist, like the oligolpoly and the monopolistic competition(MC). Before understanding the differences of these 2 market structure. It's important to realize that the PC market structure consists of many firms or sellers in an area or industry. The monopoly on the other hand, consists of a single seller. A good example, would be someone selling things on an island. The differences between the PC and the monopoly market structure are (1) Ease of entry and exit for firms (2) Type of product sold (3) Type of firm (4) Profit in short run and long run. First of all, is (1) ease of entry and exit for firms. For the PC market structure, new firms can easily enter the market structure, as there are no barriers of entry. This means that new firms who knows that there is a profit to be made in some area, location or industry can easily set up a new shop there. For the monopoly, there is substantial or high barriers of entry preventing new firms from entering the market structure. These barriers of entry are created by existing or dominant firms in a monopoly to prevent new firms or competitiors to enter the market structure. The second difference is (2) the type of product sold. For a PC market structure, the product sold is similar. This means that what one seller is selling, is what another seller is selling. Hence products in the PC market structure are perfect substitutes. We also assume that in PC market structure, the consumers have perfect knowledge of the product. This means that the consumers are aware of the price sold in another shop. For the monopoly, the product sold are not perfect substitutes, and can be rather unique. The third difference is the (3) type of firm. Since the PC market structure faces the above 2 characteristics, this means that the firm in this market structure are powerless to influence the price. This means they have no control to increase the price of the product. This is because if they increase the price of the product, and there are perfect competition, firms who increase the price, will lose out to other firms. Hence firms in PC market structure are considered to be Price Takers. Firms in monopoly market structure on the other hand, are Price Makers. This means that they can influence the price of their product sold to consumers. The monopoly is able to do that, as the monopolist is the single seller in a market. The last difference is the (4) existence of profit. For the PC firm, there is a possibility to earn abnormal profit in the short run, but not possible in the long run. This is because, in a PC market structure, when existing firms earn profit, new firms will enter the market structure, shrinking the profit. For the monopoly, there is a possibility to earn abnormal profit in short run and long run, as there is the existence of barriers of entry to prevent new firms to enter the market. Hope this helps. ( although I may have listed the differences here, they are not the only ones, there are others as well, but the rest can be complicated and might need the use of graphs ). (cheong@bgymail.gd.cn)
How oligopoly originate?
Generally, collusion occurs when participating firms can increase their short-run economic profits by controlling supply, acting like a monopoly.
What is the difference between the term 'monopoly' and 'natural monopoly'?
The difference between the term 'monopoly' and 'natural monopoly' is a monopoly is a market situation one group controls the availability and price of a service or item. A natural monopoly is a service or item that is provided by a single sorce. An example would be transportation like buses, or taxies.
What are some example of opligopoly?
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.
How is an oligopoly different from monopoly?
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
Is Tesco supermarket monopoly or oligopoly or monopolistic competition?
it is not the company which can be said as monopoly or oligopoly, these both terms refer to two different MARKET structures. therefore the retail industry of UK is said to have similar features as in oligopoly as there are some firms like Tesco, Sainsbury and ASDA which lead the market.
What role does market play in the distribution of goods and services?
Definition of 'Perfect Competition'A market structure in which the following five criteria are met:1. All firms sell an identical product.2. All firms are price takers.3. All firms have a relatively small market share.4. Buyers know the nature of the product being sold and the pricescharged by each firm.5. The industry is characterized by freedom of entry and exit.Definition of '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.The retail gas market is a good example of an oligopoly because a small number of firms control a large majority of the market.Definition of 'Monopoly'A situation in which a single company or group owns all or nearly all of the marketfor a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products. According to a strict academic definition, a monopoly is a market containing a single firmDefinition of 'Monopolistic Market'A type of market that features one, if not all, of the traits of a monopoly such as high price levels, supply constraints, or excessive barriers to entry. Because this type of market would be comprised of one supplying firm, consumers would have no choice but to purchase solely from this firm. Without This type of market stands in contrast to a perfectly competitive market.
How monopolistic competition like perfect competition?
Monopoly is a market structure where single seller sell its goods and service to large number of buyer. Monopoly firms itself industry because in monopoly only one seller are exists in market. Monopolistic market structure reflect the market situation where large no. of buyer and seller are enjoying. The main similarities between monopoly and monopolistic competition are as follow:- . 1) Both market are price maker i.e. price and level of output is decided by firm itself. 2) Large number of buyer are present in the market. 3) Product differentiated on the basis of size, brand, packing feature etc.
What is the difference between monoplistic compition and perfect compition?
Monopolistic competition versus perfect competition in the long run: The most important difference between monopolistic competition and perfect competition is product differentiation. COMPARISON: Perfect competition: the long run equilibrium where MR=MC=P=AR=AC (at the minimum); Monopolistic competition: the long run equilibrium where MR=MC < P = AC (above the minimum)); This is a rather common question within the Market Structure topic in Economics. In Market Structure, the Perfect Competition (PC) and the monopoly are considered extreme market structures, while other market structures also exist, like the oligopoly and the monopolistic competition(MC). Before understanding the differences of these 2 market structure. It's important to realize that the PC market structure consists of many firms or sellers in an area or industry. The monopoly on the other hand, consists of a single seller. A good example, would be someone selling things on an island. The differences between the PC and the monopoly market structure are (1) Ease of entry and exit for firms (2) Type of product sold (3) Type of firm (4) Profit in short run and long run. First of all, is (1) ease of entry and exit for firms. For the PC market structure, new firms can easily enter the market structure, as there are no barriers of entry. This means that new firms who knows that there is a profit to be made in some area, location or industry can easily set up a new shop there. For the monopoly, there is substantial or high barriers of entry preventing new firms from entering the market structure. These barriers of entry are created by existing or dominant firms in a monopoly to prevent new firms or competitors to enter the market structure. The second difference is (2) the type of product sold. For a PC market structure, the product sold is similar. This means that what one seller is selling, is what another seller is selling. Hence products in the PC market structure are perfect substitutes. We also assume that in PC market structure, the consumers have perfect knowledge of the product. This means that the consumers are aware of the price sold in another shop. For the monopoly, the product sold are not perfect substitutes, and can be rather unique. The third difference is the (3) type of firm. Since the PC market structure faces the above 2 characteristics, this means that the firm in this market structure are powerless to influence the price. This means they have no control to increase the price of the product. This is because if they increase the price of the product, and there are perfect competition, firms who increase the price, will lose out to other firms. Hence firms in PC market structure are considered to be Price Takers. Firms in monopoly market structure on the other hand, are Price Makers. This means that they can influence the price of their product sold to consumers. The monopoly is able to do that, as the monopolist is the single seller in a market. The last difference is the (4) existence of profit. For the PC firm, there is a possibility to earn abnormal profit in the short run, but not possible in the long run. This is because, in a PC market structure, when existing firms earn profit, new firms will enter the market structure, shrinking the profit. For the monopoly, there is a possibility to earn abnormal profit in short run and long run, as there is the existence of barriers of entry to prevent new firms to enter the market.
Compare and contrast perfect competition and monopolistic competition?
This is a rather common question within the Market Structure topic in Economics. In Market Structure, the Perfect Competition (PC) and the monopoly are considered extreme market structures, while other market structures also exist, like the oligolpoly and the monopolistic competition(MC). Before understanding the differences of these 2 market structure. It's important to realize that the PC market structure consists of many firms or sellers in an area or industry. The monopoly on the other hand, consists of a single seller. A good example, would be someone selling things on an island. The differences between the PC and the monopoly market structure are (1) Ease of entry and exit for firms (2) Type of product sold (3) Type of firm (4) Profit in short run and long run. First of all, is (1) ease of entry and exit for firms. For the PC market structure, new firms can easily enter the market structure, as there are no barriers of entry. This means that new firms who knows that there is a profit to be made in some area, location or industry can easily set up a new shop there. For the monopoly, there is substantial or high barriers of entry preventing new firms from entering the market structure. These barriers of entry are created by existing or dominant firms in a monopoly to prevent new firms or competitiors to enter the market structure. The second difference is (2) the type of product sold. For a PC market structure, the product sold is similar. This means that what one seller is selling, is what another seller is selling. Hence products in the PC market structure are perfect substitutes. We also assume that in PC market structure, the consumers have perfect knowledge of the product. This means that the consumers are aware of the price sold in another shop. For the monopoly, the product sold are not perfect substitutes, and can be rather unique. The third difference is the (3) type of firm. Since the PC market structure faces the above 2 characteristics, this means that the firm in this market structure are powerless to influence the price. This means they have no control to increase the price of the product. This is because if they increase the price of the product, and there are perfect competition, firms who increase the price, will lose out to other firms. Hence firms in PC market structure are considered to be Price Takers. Firms in monopoly market structure on the other hand, are Price Makers. This means that they can influence the price of their product sold to consumers. The monopoly is able to do that, as the monopolist is the single seller in a market. The last difference is the (4) existence of profit. For the PC firm, there is a possibility to earn abnormal profit in the short run, but not possible in the long run. This is because, in a PC market structure, when existing firms earn profit, new firms will enter the market structure, shrinking the profit. For the monopoly, there is a possibility to earn abnormal profit in short run and long run, as there is the existence of barriers of entry to prevent new firms to enter the market. Hope this helps. ( although I may have listed the differences here, they are not the only ones, there are others as well, but the rest can be complicated and might need the use of graphs ). (cheong@bgymail.gd.cn)
What is the legal Cartel Theory?
the legal Cartel theory suggests that some industries may seek to be regulated or desire that regulation continues, so that the number of firms is limited and the existing firms can act like a monopoly.
How oligopoly originate?
Generally, collusion occurs when participating firms can increase their short-run economic profits by controlling supply, acting like a monopoly.
What is the difference between the term 'monopoly' and 'natural monopoly'?
The difference between the term 'monopoly' and 'natural monopoly' is a monopoly is a market situation one group controls the availability and price of a service or item. A natural monopoly is a service or item that is provided by a single sorce. An example would be transportation like buses, or taxies.
Any present or past examples for Monopoly and perfect competition?
Petrol Bunks are best example for perfect competition.The reason is all sellers sell same product with same price .The product differences if any is also same (like ordinary petrol /diesel & extra premium petrol /Diesel) Stock market also exhibits perfect competition. In oligopoly market there are different sellers with product differential being wide in terms of technology & price. E.G, Mosquito repellents ,where cotton nets with repellent coating, coils, electronic repellents, repellent frequency sound wave repellents are seen in markets .Buyers who are rich will buy costly repellents & others will buy low priced items. Monopoly market represent single seller & many buyers. LIC India enjoyed for many years monopoly in Life Insurance market. Railways in India is monopoly controlled by Central Government Railway Ministry . similarly petroleum product distribution is dealt by Petroleum ministry. Oil & Natural Gas Commission is having monopoly. Any producer with break through technology offers a product or service having no competitors enjoys monopoly. For sometime Maruti Udyog Ltd enjoyed monopoly over their spare parts.
What is a oligopolies?
An oligopoly is an economic condition in which there are so few independent suppliers of a particular product that competitive pricing does not take place. Oligopoly is a form of market where there is domination of a limited number of suppliers and sellers called Oligopolists. 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. An oligopoly is a market dominated by a few large suppliers. The degree of market concentration is very high. Firms within an oligopoly produce branded products and there are also barriers to entry. Another important characteristic of an oligopoly is interdependence between firms. This means that each firm must take into account the likely reactions of other firms in the market when making pricing and investment decisions. This creates uncertainty in such markets - which economists seek to model through the use of game theory. The retail gas market is a good example of an oligopoly because a small number of firms control a large majority of the market. Economics is much like a game in which the players anticipate one another's moves. Game theory can also be applied in this situations as if decision makers must take into account the reasoning of other decision makers. It has been used, for example, to determine the formation of political coalitions or business conglomerates, the optimum price at which to sell products or services, the best site for a manufacturing plant, and even the behavior of certain species in the struggle for survival.The ongoing interdependence between businesses can lead to implicit and explicit collusion between the major firms in the market. Collusion occurs when businesses agree to act as if they were in a monopoly position. KEY FEATURES OF OLIGOPOLY - A few firms selling similar product - Each firm produces branded products - Likely to be significant entry barriers into the market in the long run which allows firms to make supernormal profits. - Interdependence between competing firms. Businesses have to take into account likely reactions of rivals to any change in price and output THEORIES ABOUT OLIGOPOLY PRICING There are four major theories about oligopoly pricing: (1) Oligopoly firms collaborate to charge the monopoly price and get monopoly profits (2) Oligopoly firms compete on price so that price and profits will be the same as a competitive industry (3) Oligopoly price and profits will be between the monopoly and competitive ends of the scale (4) Oligopoly prices and profits are "indeterminate" because of the difficulties in modelling interdependent price and output decisions Distinct features of an oligopolistic market: - An oligopolistic market comprises a handful of firms, engaged in selling analogous products - All oligopolistic markets increase mutual dependence among the firms involved in similar competition. It also prepares businessmen to accept the outcomes arising from rivalries with respect to alterations in the production and prices of goods. - In near future, an oligopolistic market is likely to impose restrictions on admission, in an attempt to incur abnormal profits. - Each of the business houses involved with this market produces branded goods THE IMPORTANCE OF PRICE AND NON-PRICE COMPETITION Firms compete for market share and the demand from consumers in lots of ways. We make an important distinction between price competition and non-price competition. Price competition can involve discounting the price of a product (or a range of products) to increase demand. Non-price competition focuses on other strategies for increasing market share. Consider the example of the highly competitive UK supermarket industry where non-price competition has become very important in the battle for sales - Mass media advertising and marketing - Store Loyalty cards - Banking and other Financial Services (including Travel Insurance) - In-store chemists / post offices / creches - Home delivery systems - Discounted petrol at hyper-markets - Extension of opening hours (24 hour shopping in many stores) - Innovative use of technology for shoppers including self-scanning machines - Financial incentives to shop at off-peak times - internet shopping for customers Price leadership: Oligopolistic market The dominance of one firm in the oligopolistic market results in price leadership. Firms having less market shares only follow the prices fixed by leaders. Oligopolistic competition: Effects - Oligopolistic competition in most cases leads to collaboration of the business firms on issues like raising the prices of various goods and subdue production process. - Under other given market conditions, the competition between the sellers acquires a violent form, on the grounds of lowering the prices and increasing the production. - Collaboration of various firms also brings about stabilization in the unsteady markets. PRICE LEADERSHIP IN OLIGOPOLISTIC MARKETS When one firm has a dominant position in the market the oligopoly may experience price leadership. The firms with lower market shares may simply follow the pricing changes prompted by the dominant firms. We see examples of this with the major mortgage lenders and petrol retailers. In reality, it is the Oligopoly market which exists, having a high degree of market concentration. This indicates that a huge percentage of the Oligopoly market is occupied by the leading commercial firms of a country. These firms require strategic planning to consider the reactions of other participants existing in the market. This is precisely why an oligopolistic market is subject to greater risk of connivances.By: Schafaq ChohanAn oligopoly is a market form in which a market or industry is dominated by a small number of sellers. Barriers to entry are high.
