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Oligopoly
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. There are collusive and non-collusive oligopolies.
327 Questions
What decisions does OPEC make?
OPEC (Organization of the Petroleum Exporting Countries) primarily makes decisions regarding oil production levels among its member countries to influence global oil prices. The organization meets regularly to assess market conditions and may agree to increase or decrease production quotas to stabilize or manipulate oil prices. Additionally, OPEC discusses strategies for enhancing cooperation among member states and may address broader issues related to energy policies and market trends.
Why is the number of firms small in oligopoly market.explain?
By definition, oligopoly means 'a few firms'. The prefix olig- means 'few' in Greek (e.g.) oligarchy - 'rule of the few') and the suffix -poly is the description of a market.
Three reasons an oligopoly may persist even without artificial controls include: 1) the market has high entry costs, which serve as a barrier to entry to new firms because high capital costs provide strict economies of scale to larger firms; 2) the oligopolistic firms collude to control the market and prevent competitors entering; 3) leading firms out-compete new firms by artificially lowering prices, initiating a price war which the smaller firms can't afford as larger firms with more financial capital can.
From OPEC.org:
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization, created at the Baghdad Conference on September 10-14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
Why is amazon a oligopoly market?
Amazon operates in an oligopoly market due to its dominant position in the e-commerce sector, where a few large firms control a significant share of the market. It faces limited competition from other major players like Walmart and Alibaba, which also have substantial resources and market influence. This concentration allows Amazon to exert considerable pricing power and influence over suppliers and consumers. Additionally, barriers to entry, such as high startup costs and economies of scale, further reinforce its oligopolistic status.
What company operating under condition of monopoly and oligopoly?
There may be a case for government, the welfare consequences of monopoly, duopoly or oligopoly.
The "Organization of Petroleum Exporting Countries" (OPEC) includes most of the world's major oil-exporting countries. By agreeing to limit their respective production levels, they maintain a higher price for their oil worldwide. While this extends the life of their domestic fields, and provides substantial income, it is a semi-monopoly that limits the affordability of petroleum in many of the world's developing countries. There is no international law that prohibits such cartels, as would apply within many countries.
(In the past, such attempts to control the worldwide production of raw materials would have almost certainly led to conquest of these areas by militarily stronger countries.)
Can monopolies become oligopolies?
If you have a monopoly, why would you want an oligopoly? You make more profit alone.
Is Shell Oil Company a oligopoly?
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.
How do economist determine whether a market is an oligopoly?
A market is an oligopoly when a small number of sellers dominate a market or industry. Economists use a set of criteria to determine whether a market form is an oligopoly. These criteria include profit maximization conditions, ability to set price, high barriers to market entry, a small number of firms, long-run abnormal profits, product differentiation, perfect knowledge of cost and demand functions, interdependence on other firms' marketing strategies, and non-price competition.
1. Cartel: A cartel is when a group of firms decide to agree on leveling out the output. In some countries, output supply needed might be more than other countries or more than the specified output level. Thus, it might be a problem in some countries.
2. Collusions: Collusions are informal agreements done between firms in an oligopoly to ristrict competition. Thus, new firms my not be able to set up and this may cause dificiency of choice for customers.
What are the feature of oligopoly?
Features of Oligopoly.
The important features of oligopoly are given as follow :
1. Few Sellers
2. Homogeneous or differentiated products
3. Entry is possible but difficult
4. Interdependence
5. Uncertainty
6. Indeterminateness
7. Price rigidity
8. Non price competition
9. Tendency to form cartel
10. Close substitutes
