• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Explain why oligopoly is a realistic market structure in most economies. (10)

Extracts from this document...


Explain why oligopoly is a realistic market structure in most economies. (10) An oligopolistic market is a market where there are a small number of firms which are interdependent and compete with each other. There are three main characteristics of an oligopoly, these are; firstly there is some product differentiation, secondly there a few dominant firms and finally each of the firms are interdependent. All firms entering into specific markets are going to come up against restrictions and requirements. These are known as barriers to entry and are one of the main features of an oligopolistic market. The example that will be used for illustrating an oligopoly is the soft drinks industry. ...read more.


Even when people are aware the price is still going to be relatively high due to the high capital costs encountered by the firm. This will possibly increase the price of the product leading to less demand for the product. This follows onto the theory of the kinked demand curve. * This kinked demand curve shows that a rise or fall in marginal cost will not affect the profit maximising level of output or price. This shows relative price stability in oligopolistic markets. This kinked demand curve assumes asymmetrical reaction to a change in price by one firm. This means that as one firm increases it price then the other firms will not react. ...read more.


Although being illegal , this can occur on any level, such as electrical contractors, builders, a local example or jersey is that this occurs in the driving instructors association where a standard price is charged for lessons. From this we can see that most markets feature oligopolistic characteristics. They occur due to the type of industry and firms within a market. As monopolies are in most terms illegal, certain industries can become oligopolistic, and collude to ensure profits acting in a monopolistic way. In every industry there is more than one firm contesting for market share, often being a small amount of firms that dominates the market, it is these characteristics which make an oligopoly a realistic market structure in most economies. ?? ?? ?? ?? Economics essay ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Marketing section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Marketing essays

  1. Distinguish between Monopolistic Competition and Oligopoly

    firm is able to charge a premium price on it and earn monopoly profit without levels of demand falling to heavily. Secondly, it is difficult for competitors to challenge the supremacy of the brand. For example, mars bars and jaguar cars all have stable demand s at premium price in the short run.

  2. Virgin Atlantic Airways: 10 Years Later.

    * Leased Aircraft - Leasing allows for quicker turnover of high mileage aircraft. It also takes advantage of having the latest technology available to its customers. * Alliances - Virgin's Alliances with smaller airlines provides a feeder service for customers.

  1. Use economic theory to explain how supermarkets in my local area compete for custom.

    It means that the supermarkets are doing really well and competing against each other because they are attracting customers who are willing to spend a lot, which means more profits for the supermarkets. The ninth question usefully told me that people do generally look to save money and care about promotions.

  2. "In oligopoly markets price and output decisions are indeterminate." Explain and discuss.

    switch to competing products for which the price had stayed the same. This means that the upper part of the demand curve would be highly elastic. P Elastic demand above SP SP Inelastic demand below SP D Q Figure 1.0: Kinked Demand Curve This is illustrated in Figure 1.0 Kinked Demand Curve (Page 2)

  1. The e-Learning market for corporations.

    According to a survey by Frost & Sullivan (01/01) the market of SCEL is divided among four major players which hold together over 80% of the market in the following division: Centra 46%, Mentergy 13.8%, Interwise 11.9% and Lotus 9%.

  2. marketing Coca Cola

    - Where they want to buy the product? - What kind of pack they want? - How much they want to spend? All this information can help to make the product a success. 2. Marketing Research: this goes further, it analyses a given marketing opportunity or problem, defines the research and data collection methods require to deal with

  1. Describe the three market types monopolistic, oligopolistic and competitive.

    each with unimportant market share; this means there won't be a single person or firm that can affect the market. * Each firm is too small to affect price via a change in market supply - each individual firm is assumed to be a price taker.

  2. Asda - market structure.

    However, Asda coped with the crisis very well as they told their customers that they wouldn't put their health at risk and would purchase beef from abroad. Also, many people began to purchase organic products, as there was a scare that many suppliers were producing Genetically Modified (GM)

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work