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Imperfect Markets - Oligopoly and Monopoly - Assignment Example

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This paper " Imperfect Markets - Oligopoly and Monopoly" focuses on the fact that oligopoly is a market structure where the market consists of a few firms. This is mainly to allow for the barriers to be erected and so that there is a barrier for entry of new firms and competition. …
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Imperfect Markets - Oligopoly and Monopoly
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Download file to see previous pages In the oligopoly markets, there is a strong barrier for entry into the market. Here in these markets, the barriers for entry into the markets are varied and the various industries might have different levels of entry barriers. Secondly, these markets have a few companies and hence the companies require taking account of each other and the companies are mutually dependent on one another. This means that the companies will be affected by the decisions made by the other firms in the markets.

Monopoly is a market structure where there is only one firm in the markets. The products that are produced in these markets are unique and there is not easy entry into the markets. There are a few key features that are related to the monopoly markets. These markets have products that are differentiated and have a strong level of brand loyalty. The firms of these markets have complete control over the price of the firms and the prices cannot affect the demand for the products.

The different competitions in the market affect the consumers in a number of ways. Every market has a structure very different from the other and the effects on the consumer are varied. In the assumptions that are mentioned above, it is clear how the market functions. In the case of a monopoly, there is only one firm in the market. This makes the firms price makers. In this type of market the consumers do not have a wide variety to choose from hence they require accepting whatever is available in the market. This type of market structure is not very beneficial to consumers since the choice of products is not available and the customers need to pay whatever is set by the firm since the market consists of just one firm. Also here the monopolistic company can produce lower outputs at higher prices.

However, in the case of an oligopoly market, the market has a few companies. The products in these markets can be differentiated as well as undifferentiated (Anderson, 2005).  ...Download file to see next pages Read More
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