Oligopoly is a market structure in which only a few sellers offer similar or identical products. It is an intermediate form of imperfect competition. OPEC is an epitome of Oligopoly. Features of Oligopoly: • Non Price Competition • Interdependent decision making • Entry Barriers If organizations behave in cooperative mode to mitigate the competitions amongst themselves it is called Collusion. When two or more organizations agree to set their outputs or prices to maintain monopoly it is called
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Capital Structure and Profit Capital Structure Definition A unite of a company’s long-term debt‚ specific short-term debt‚ common equity and preferred equity. The capital structure is how a firm finances its overall operations and growth by using different sources of funds. Debt comes in the form of bond issues or long-term notes payable‚ whereas equity is classified as common stock‚ preferred stock or retained earnings. Also‚ Short-term debt such as working capital requirements is considered
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OLIGOPOLY Oligopoly is a market with a few sellers. Fewness means in this market number of firms is such that one firm’s action affects the other firms in the market. Hence whenever any firm makes any decision regarding price etc‚ it has to take into account the behavioural response of the other. This main feature of oligopoly is called interdependence. This interdependence brings forth the need for strategic decision making. Strategic decision making involves conjectural variation. Conjectural
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collusive oligopoly (10 marks) * * Oligopoly‚ is a market form in which where few sellers dominate the market for an identical or differentiated good‚ and where there are high barriers to entry. The market is determined by very few‚ however very large firms. The barriers of entry are very significant‚ as they include high initial fixed costs‚ access to resources and economies of scale and legal barriers. Unlike perfect competition where there are identical products‚ in an Oligopoly you have
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Market structures and pricing Revenues Consumers * Inverse demand curve gives willingness-to-pay * Benefit consumer(s) derive(s) from additional good; * Area under inverse demand curve measures total willingness-to-pay‚ total benefit or total surplus. * Maximum price I can charge as producer determined by inverse demand function * Marginal revenues; revenue of next unit I sell Strategies * Profit maximization * Marginal profits equal to 0 (MR=MC) *
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competitive market‚ the actions of any single buyer or seller will a. have a negligible impact on the market price. b. have little effect on market equilibrium quantity but will affect market equilibrium price. c. affect marginal revenue and average revenue but not price. d. adversely affect the profitability of more than one firm in the market. Table 14-1 Quantity Total Revenue 0 $0 1 $7 2 $14 3 $21 4 $28 2. Refer to Table 14-1. For a firm operating in a competitive market‚ the price is a. $0
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Oligopoly In a oligopoly market structure‚ there are a few interdependent firms that change their prices according to their competitors. Ex: If Coca Cola changes their price‚ Pepsi is also likely to. Characteristics: * Few interdependent firms * A few barriers to entry * Products are similar‚ but firms try to differentiate them * There is branding and advertising * Imperfect knowledge (where customers don’t know the best price or availability) Revenue Curves Total Revenue
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particular market is controlled by a small group of firms. ! An oligopoly is much like a monopoly‚ in which only one company exerts control over most of a market. In an oligopoly‚ there are at least two firms controlling the market. The retail gas market is a good example of an oligopoly because a small number of firms control a large majority of the market. An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can
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HOW PRODUCTIVITY IS DETERMINED Productivity is the quantity of goods and services produced from each unit of labor input. Productivity’s key role in determining living standards is as true for nations as it is for stranded sailors. Recall that an economy’s gross domestic product (GDP) measures two things at once: the total income earned by everyone in the economy and the total expenditure on the economy’s output of goods and services. GDP can measure these two things simultaneously because‚ for
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A monopoly is a market structure where there is merely one manufacturer/supplier for a product. The lone business is the industry. Entrance into such a market is controlled based on elevated costs or additional obstacles‚ which may be‚ political social or economic. In an oligopoly‚ there are simply a limited number of firms that create an industry. This top quality assemblage of firms has control over the price in addition to a‚ monopoly; an oligopoly also has extraordinary obstacles to admittance
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