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By Mary Hall Updated May 19, — 4: A monopoly and an oligopoly are economic market structures where there is imperfect competition in the market. A monopoly market contains a single firm that produces goods with no close substitute, with significant barriers to entry of other firms.
An oligopoly market has a small number of relatively large firms that produce similar but slightly different products. Again, there are significant barriers to entry for other enterprises. A firm may dominate an industry in a particular area where there are no alternatives to the same product but have two or three similar companies operating nationwide.
Thus, the firm may be a monopoly in a region but operate in an oligopoly market in a larger geographical area. In an oligopoly, the prices are moderate due to the presence of competition.
However, they are higher than they would be in perfect competition. In an oligopoly market, the barriers to entry are high due to the economies of scale.
However, there are oligopolies, and in an oligopoly, firms can influence the market by setting their prices, marketing strategies, and customer service. In an oligopoly, firms may collude rather than compete. The cooperation makes them operate as though they were one firm. This changes the market structure from being an oligopoly to a monopoly.
There must be some measure of competition in an oligopoly market structure. A prominent example of collusion by an oligopoly occurred in the U. Inthe Department of Justice sued six major book publishers for price-fixing electronic books.
In a free market, price fixing, even without judicial intervention, is unsustainable. Firms that lower prices to the point where they are not profitable are unable to remain in business for long. Because of this, members of oligopolies tend to compete in terms of image and quality rather than price.
For related reading, see: What are the most famous cases of oligopolies?Unlike other oligopolies the cigarette market is not elastic so price changes that would occur in other oligopoly markets that affect the consumer don’t not occur in the cigarette market.
Competition in other oligopoly markets can directly negatively affect the consumer but because the cigarette market is a market that change rarely happens. Analysis of Oligopoly Market Structure Essay This essay focuses on the tobacco industry with respect to its oligopolistic market structure.
The basic characteristics of the oligopoly are discussed and followed by the identification of the tobacco industry as a . The demand for cigarettes and other tobacco products Anne-Marie Perucic Tobacco Control Economics.
Tobacco Free Initiative. Tobacco industry is an oligopoly (large number of Cigarette Prices, Cigarette Consumption, and Male Lung Cancer Deaths France, E-cigarettes are the only product that could threaten the cigarette oligopoly, but proposed Food & Drug Administration, or FDA, rules may have just created an e .
E-cigarettes are the only product that could threaten the cigarette oligopoly, but proposed Food & Drug Administration, or FDA, rules may have just created an e-cigarette oligopoly dominated by.
Oligopoly An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher costs for consumers. With few sellers, each oligopolist is .