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Let us learn about Oligopoly Market. After reading this article you will learn about: Nature of Oligopoly Market 2.
Types of Oligopoly Market. Nature of Oligopoly Market: At a first sight, many of the markets resemble monopolistic competition where sellers behave independently, i. Each seller takes into account the actions of other sellers while taking price-output decision.
Such a market form is popularly known as oligopoly.
This term is derived from the Greek word oligos meaning few and polis meaning sellers. Thus, oligopoly is said to exist when there are few sellers of homogeneous or differentiated products.
Some define that when the number of sellers vary between 2 and 20, the market is said to be an oligopolistic one. The extreme form of oligopoly is duopoly when number of sellers is exactly two.
In other words, the key issue is not numbers but rather the interdependence among sellers. While in real world economies oligopoly market is found, it has not been so far possible to build up a satisfactory integrated general theory of oligopoly behaviour.
The failure to build up a general theory of oligopoly is due to the differences in the structure of this market form as well as in the behaviour of firms.
Because of the differences in structure of oligopoly market, economists often prescribe different models explaining different behaviour of the oligopolists.
This market differs from the market forms of perfect competition, monopoly, and monopolistic competition. This means that each seller is affected by the actions of his rival sellers.
In view of these, oligopolistic industries are of many types. The industries exhibiting oligopoly business differ widely in their institutional set up. In practice, there may be as many varieties of arrangement as the number of industries.
That is why quite a larger number of theoretical models have been built up by economists to describe the oligopoly form of market. In fact, difficulty of building a general theory of oligopoly is due to the peculiar characteristics of the oligopoly market. The most distinctive feature of an oligopolistic industry is the interdependence among sellers.
In its own decision-making, every firm takes into account the behaviour or actions of its rival firms.
That is to say, actions and reactions of each firm are studied seriously by the rival firms. However, there may be different reaction patterns to actions of the first firm.
A rival seller may ignore the actions of the competitors. In some cases, some firms may engage in price competition. They may also engage in non-price competition. No specific or predictable behavioural pattern is discernible since a great deal of uncertainty is involved as far as actions and reactions are concerned.
That is why there is no satisfactory and comprehensive model of oligopoly. Above all, the complexities and diversity of oligopoly business makes analysis of price and output determination difficult. A broad theory, with assumptions so general that they cover all the possible oligopoly situations stated above, offers no guidance to analyse particular oligopoly situation, while developing separate theories based on all possible assumptions is virtually an impossible task.
Types of Oligopoly Market: An oligopoly market is beset with the problem of price determination since the actions and reactions of rival firms vary from industry to industry.
So, before determining the price of a product, it is better to classify oligopoly market on the basis of: It may be homogeneous or differentiated: If the products of different firms are homogeneous then we have a case of homogeneous oligopoly or pure oligopoly. When oligopoly sellers sell homogeneous products, price differences between the products will be rather insignificant.
In other words, greater the homogeneity of the product, greater will be interdependence among sellers.CEPR organises a range of events; some oriented at the researcher community, others at the policy commmunity, private sector and civil society.
Each entrepreneur wants his business to be alone on the market without timberdesignmag.com, it is an unrealistic and probably unachievable situation, at least for a . MGI’s mission is to help leaders in the commercial, public, and social sectors develop a deeper understanding of the evolution of the global economy and to provide a fact base that contributes to decision making on critical management and policy issues.
This report first examines these institutional and structural changes, and then focuses on the nature of competition in the new environment. The purpose of the report is to identify and discuss both possible antitrust concerns and plausible procompetitive explanations of the emerging pricing and other competitive strategies of pharmaceutical.
CONNECTECHASIA SUMMIT OPENING PLENARY DAY 1, TUESDAY, 26 JUNE Location: Orchid Ballroom – Level 4, Marina Bay . In economics, a monopsony (from Ancient Greek μόνος (mónos) "single" + ὀψωνία (opsōnía) "purchase") is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.
In the microeconomic theory of monopsony, a single entity is assumed to .