Oligopoly: Description of and application of. Very precise

Oligopoly Oligopoly comes from the Greek word meaning hardly a(prenominal) sellers. Big art is an congressman of oligopoly. It is a market dominated by some sellers. These ar industries the akins of steel, automobilemobiles, oil, and breakfast cereals. Because in that location ar a few(prenominal) degradeds, each firm must consider how their policies are divergence to effect their competitors behavior. In some oligopolist industries there is a unvarying product. Ex. Steel, Oil, etc. In others, the product is differentiated across developrs. Ex. Automobiles, tobacco. Where the products are homogeneous, there is greater inter wagerence among the firms in the diligence. In these markets, a small(a) change in price will send customers to and from the rivals. In markets where the products are differentiated, producers are not quite as fond to each others actions. Oligopoly is like a tennis match, where each players actions depend on how and where the contrary hits the b all. How have oligopolies emerged? This type of market social system can often be traced to some form of restriction to entry like economies of scale, reasoned restrictions, put up name and brand loyalty or control condition over an necessity resource. The same barriers to entry that we defined in monopoly try for to oligopoly: economies of scale, level-headed restrictions, control of an essential resource.

Economies of Scale This is perhaps the most impregnable barrier. If the lower limit efficient scale in an industry is a fairly large size, then only a few firms are needed to produce the output demanded by the market. For the auto industry, it ha! s been found that the minimum efficient scale for an auto plant is one that can produce 10% of the US auto market. High Cost of Entry The high speak to of entering the market for new entrants is another aspect of the oligopolist market. The vilify of building the size plant... If you want to get a serious essay, order it on our website: OrderCustomPaper.com

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