Market Oligopoly
Oligopoly
FMCG sector
[pic]
Submitted By:
Saurabh Saini
(09927904)
Table of Contents
1. Introduction
2. Oligopoly: Some concepts and definitions
3.
Introduction
There are different types of market orientation in different geographies and for different products or verticals. It can be perfect competition or monopolistic or may be a duopoly. But in the reality, probably the most important and common nature of competition and the market structure is “Oligopoly“, which can also be defined as “Competition among the Few”.
So, setting prices independently is very rare or almost non-existent in the oligopolistic markets. Some kind of understanding between the firms arises, may be either in the form of a formal agreement or even in a tacit way. A formal agreement is one when the oligopolists agree after discussion to observe certain common rules of conduct in regard to price and output determination. So this kind of an oligopolistic situation is generally termed as Collusive Oligopoly. But more often we find that the agreement between the firms is a tacit one, as in most of the countries a formal or open agreements to form monopolies are illegal.
Under oligopoly, a firm can not assume that its rival will keep their prices unchanged when it makes change in its own price. So the demand curve facing an oligopolists looses its definiteness and as well as its own significance. It goes on constantly shifting as the rivals change their prices in reaction to the price changes by that firm.
SOME CONCEPTS AND DEFINITIONS
Oligopoly: An economic condition in which a small number of sellers exert control over the market price of a commodity.
COLLUSIVE OLIGOPOLY:
Cartels: In a Cartel type of collusion, firms jointly fix a price and output policy through agreements. Basically, the term ‘cartel’ was used for the agreement in which there existed a common agency which alone undertook the selling operations of all
FMCG sector
[pic]
Submitted By:
Saurabh Saini
(09927904)
Table of Contents
1. Introduction
2. Oligopoly: Some concepts and definitions
3.
Introduction
There are different types of market orientation in different geographies and for different products or verticals. It can be perfect competition or monopolistic or may be a duopoly. But in the reality, probably the most important and common nature of competition and the market structure is “Oligopoly“, which can also be defined as “Competition among the Few”.
So, setting prices independently is very rare or almost non-existent in the oligopolistic markets. Some kind of understanding between the firms arises, may be either in the form of a formal agreement or even in a tacit way. A formal agreement is one when the oligopolists agree after discussion to observe certain common rules of conduct in regard to price and output determination. So this kind of an oligopolistic situation is generally termed as Collusive Oligopoly. But more often we find that the agreement between the firms is a tacit one, as in most of the countries a formal or open agreements to form monopolies are illegal.
Under oligopoly, a firm can not assume that its rival will keep their prices unchanged when it makes change in its own price. So the demand curve facing an oligopolists looses its definiteness and as well as its own significance. It goes on constantly shifting as the rivals change their prices in reaction to the price changes by that firm.
SOME CONCEPTS AND DEFINITIONS
Oligopoly: An economic condition in which a small number of sellers exert control over the market price of a commodity.
COLLUSIVE OLIGOPOLY:
Cartels: In a Cartel type of collusion, firms jointly fix a price and output policy through agreements. Basically, the term ‘cartel’ was used for the agreement in which there existed a common agency which alone undertook the selling operations of all