• 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...

Introduction

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.

Middle

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.

Conclusion

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. Virgin Atlantic Airways: 10 Years Later.

    "flying club red" members will receive regular mailings of special offers and fare to Virgin Atlantic destinations, as well as promotions form our other airline partners . "flying club silver" member status, once achieved cannot be down graded; to qualify members need to make the equivalent of one upper class one-way flight.

  2. Asda - market structure.

    Asda stock big brands like Pathaks, Rubicon and Pride. This was stated in the Asian newspaper called 'The Eastern Eye (2nd July 2002)'. 5. Globalisation & Internationalism By merging with Wal-Mart, Asda has become well known throughout the world. Since then the growth of Asda has increased.

  1. Distinguish between Monopolistic Competition and Oligopoly

    Instead, firms limit competition in order to limit the risks to their own market shares and profits. Non-price competition is also a very powerful mean of deterring potential competitors. The interdependence of firms within an Oligopoly limits the ability for firms to exploit markets to their own benefit.

  2. Consider L & P is in the oligopoly market structure.

    This will possibly increase the price and lead to less demand for the service. From this we can see that this market features 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.

  1. The e-Learning market for corporations.

    * Message boards - these are places where learners can post questions and answers about related topics. * Text chat - Text chat provides an electronic forum in which the learners can communicate outside of the main classroom. The SCEL products also offer different combinations of administrative functionality that facilitate e-learning.

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

    How I got my questionnaires answered To get results for my questionnaires I decided to use the Shires shopping centre in Leicester City Centre. I asked people whether they would answer my questionnaire. I tended to go for older people (15 or over)

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

    The Kinked Demand Curve 2. Price Leadership 3. Cartel 4. Non-price Competition The Kinked Demand Curve is one theory that is used to analyze firms' behaviour in an oligopoly with no collusion between firms. It is observed that where there is oligopoly, raising product prices would mean a significant loss of sales because buyers would

  2. Corporate Structure

    Cooper's ability to break down a company, transfer the necessary knowledge to the divisions and make or incorporate the company into a division, which is successful and efficient, is an amazing skill in itself. However, Cooper's ability to evolve, add new product lines and divest of old ones is truly what makes their acquisition process a core competence.

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