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A monopoly refers to a market with only one seller of a particular good or service. A monopoly is characterized by a single seller in the market and, therefore, no competition. In connection to this, the seller makes abnormal profits as a result of market domination. Abnormal profits are realized because there are many buyers in the market, and the seller is the price maker. Moreover, the seller controls the good or service prices in that market; there is information asymmetry; consumers do not have complete information; the product does not have close substitutes and there are barriers to entry. (Sexton 332)
An oligopoly is a market that is dominated by few sellers. It has two to ten firms in the business competing with each other. Oligopoly mostly results from collusion where several firms come together to form a single firm and, therefore, reduce competition. Oligopolies compete on the basis of prices, technological innovation, quantity, reputation, or advertising.
Oligopolies are characterized by few firms in the business such that the actions of one firm influence those of another. The products may be homogenous or differentiated; there is non-price competition where firms compete on other terms apart from prices including differentiated products, loyalty schemes or advertisement; oligopolistic firm are so large that their individual actions affect the market conditions; the firms have perfect information, but buyers have imperfect information. (Sexton 332-333).
From the description Facebook is not a pure monopoly since there are other firms in the business as twitter, LinkedIn and MySpace among others. It would be considered a leading oligopoly since collusion and acquisition of other firms has given it an advantage over other social network firms. However given the recent efforts example buying Oculus Rift and WhatsApp there is concern that this
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Rival firms in an oligopoly match each other’s price cuts but do not match each other’s price increases. Competition in an oligopoly primarily takes the form of advertising and product differentiation. There are a lot of barriers to entry in an oligopoly like economies of scale, product differentiation and brand loyalty, mergers and takeovers etc (Slomon 174).
The group of companies prior to the merger was individual competitors in a market dealing with the same products. However, after being bought by two lawyers, the environment is bound to change as the competitive market changes in structure. The preceding scenario is an example of an imperfect competitive market referred to as monopolistic competition.
The research delves into monopolistic competitive market. The mere mention of monopolistic competitive shows that there are many small competitors in the same market. The competitors sell different products that can fill the same need. For example, the grocery store sells different brands of cheese.
In three years time the patent on the “Neutron” expires and another competitor enters the market making the market an Oligopoly. After a few years, since Quaser faces Monopolistic competition, it has to change its pricing and marketing strategies as there are more competitors and less possibilities of controlling the price
Monopoly can be considered as one of the goals of a company due to the fact that it can be equated to control in the market.
There are different prerequisites that can determine monopoly in a particular market. One is the
It means that an imperfect firm has a control over the market price. This control varies from industry to industry.
Monopoly is the extreme condition of imperfect competition. It is just the opposite of Perfect competition. In a Monopoly, there is a
This paper will present and examine the case of De Beers Diamond Jewellers as a monopoly in the diamond industry.
For centuries, India and Brazil were the only producers of diamond and up to the mid-1800 the world supply of diamonds was so scarce that
Firstly, a perfect competition situation comprises of a large number of small firms that compete with each other and produce at minimal costs for every unit. Secondly, a monopoly does not have rivals in the industry. It minimizes output to
The researcher of the given essay explains whether the allocative and productivity efficiency can be achieved in both markets (perfect competition and monopoly). In the light of these, market structure is defined as a framework in which a firm chooses to enter the market.
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