oligopoly

DEFINATION

• Oligopoly :- An oligopoly is a market form inwhich a market or industry dominated by asmall numbers of sellers.

OR

Oligopoly is a situation where a few largefirms compete against each other and there isan element of interdependence in decisionmaking of these firms.

• Oligopoly lies between perfect competition and monopoly.

• Few number of companies in the market.

• Produce identical products and compete on price, product, quantity and marketing.

TYPES OF OLIGOPOLY MARKET

A. Pure and differentiated

oligopoly market

B. Collusive and non-

collusive oligopoly

• PURE OLIGOPOLY :- Pure oligopoly refers tomarket where all the firms are producinghomogenous product. There is no any kind ofdifferences. Here all products are perfectlysubstitutable.

• Differentiated oligopoly:- An oligopoly market issaid to be differentiated oligopoly when theproducts produced by firms having some kind ofdifferences. It is also called imperfect market.

• COLLUSIVE OLIGOPOLY :- If the firms inoligopoly market are functioning on the basisof an agreement between them , it becomes acollusive oligopoly.

• NON-COLLUSIVE OLIGOPOLY :- Where there isno any kind of agreements and conductsbetween the firms. Each firms running on thebasis of the policies themselves.

CHARACTERISTICS

• Profit maximization

• Ability to set price

• Entry and exit

• Number of firms

• Long run profits

• Product differentiation

• Perfect knowledge

• Interdependence

• Non-price competition

MAIN FEATURES OF OLIGOPOLY

• Small number of firms

• Interdependence

• Cooperation

• Presence of monopoly element

• Advertising

BARRIERS TO ENTRY

1. NATURAL BARRIERS TO ENTRY :- When the market is not big enough for more firms.

2. LEGAL BARRIERS TO ENTRY :- occurs when a legal barrier protects a small number of companies.

MODELS OF OLIGOPOLY MARKET

• COURNOT-NASH MODEL

• BERTRAND MODEL

• KINKED DEMAND CURVE MODEL

SOME EXAMPLES

1. IN INDIA :- The petroleum and gas industries ,telecommunication , cement industry.

2. IN CANADA :- 7 companies that control bankingindustries in canada are-Royal bank ofcanada,Bank of nova scotia,Bank de montreal,Canadian imperial bank of commerce,Desjardins group and Banque nationale ducanada.

3. WORLDWIDE:-Microsoft,Sony, and Nintendodominate the video game console market.

BY:- HARSH PANDEY AND ARVIND TANWAR