StudentShare solutions
Triangle menu

Economic for Business: Monopoly and Oligopoly - Essay Example

Nobody downloaded yet

Extract of sample
Economic for Business: Monopoly and Oligopoly

the existence of blocked entry resulting to lack of competitors because of market barriers (Sloman and Sutcliffe, 2001).
Relative to monopoly, an oligopoly is a market situation that exists when: 1. there are a limited number of sellers; 2. the relationship between the limited sellers are interactive because the decision of one affects the others; and 3. the sellers may control price and market entry through collusion or they may engage in price wars (Sloman and Sutcliffe, 2001)). UK supermarket industry where Tesco, Sainsbury, Morrisons and Asda comprise a firm-concentration ratio of 70 percent and the UK brewery industries with a firm-concentration ratio of 85 percent are examples of Oligopoly.
Compared to monopoly and oligopoly, a cartel is comprised of legally independent sellers and producers grouped together to control price, limit supply and limit competition. If a centralized institution is created to coordinate the actions of several independent local or regional monopolies then the arrangement creates a cartel. If there is a formal agreement to collude in order to fix price by oligopolies then this creates a cartel. (Sloman and Sutcliffe, 2001) De Beers diamond, 1999 Vitamin cartel, MLS service, and OPEC are some of the known cartels.
Monopolies are expected to sell their goods at a higher price due to lack of competition. This may discourage some consumers to buy but majority are willing to pay for the unique good or service provided the price remains more or less stable such as in public utilities providing necessities to the market. In the case of public utilities, monopoly is ideally a preferred market situation so that price is controlled and supply is accessible to majority of consumers. Oligopolies benefit consumers in cases of price wars because the consumer is able to purchase goods and services at low prices (Sloman and Sutcliffe, 2001).
It is traditional to divide industries into categories according to the degree of competition that exists between the firms within the industry. There are four such categories. At one extreme is perfect competition, where there are very many firms competing. Each firm is considered as so small relative to the whole industry that it has no power to influence the prices of certain products or services.
At the other extreme is monopoly, where there is just one firm operating in the industry, and hence no competition from within the industry exists. In the middle emerges monopolistic competition, wherein there are quite a lot of firms competing and where there is freedom for new firms to enter the industry and oligopoly, where there are only few firms and where entry of new firms is restricted. The market structure under which a firm operates will determine its behavior. Firms under perfect competition behave quite differently from firms that are monopolistic, which behave differently again from firms under oligopoly or monopolistic competition.
In a more developed countries oligopolies are common in many sectors of their economy such as automotives, steel production and common goods. In terms of competition, oligopolistic competition paves way to a broad level of different outcomes. In some instances, firms may collude or plan to increase the price and limit their production just like in monopoly. Herein, members of an oligopoly must have a formal ...Show more


This study will explore the issues in economics and will focus on the article of Sloman and Sutcliffe entitled Economic for Business. The article explores two main issues in economy particularly in political economy and these are monopoly and oligopoly. According to the study Monopoly is a market situation characterized by: 1…
Author : simonisted
Economic for Business: Monopoly and Oligopoly essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Economic for Business: Monopoly and Oligopoly"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Form of market structure: Monopoly

The author states that one of the key points covered in the article include the objections against a monopoly as understood by the economists. The argument against monopoly is that in the absence of competition, monopolies can charge whatever they want and the charged prices are usually higher than the prices under perfect competition.

3 pages (750 words) Essay
Oligopoly is the ideal market structure because it allows society to benefit from the efficiency gains of both competition and monopoly
Such a situation of economic concentration is often referred to as oligopoly. The most important point of similarity is that the oligopolist, as well as the true monopolist, necessarily influences price (i.e. to some extent makes the market) within certain limits.
6 pages (1500 words) Essay
Four types of markets: Monopoly, Oligopoly, Monopolistic competition and Perfectly Competitive market
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
2 pages (500 words) Essay
Average cost is the total cost divided by the number of units produced. Before I go further I would like to clarify that firms maximize profits by considering the marginal cost, not the average cost. Secondly as the figure below illustrates the demand curve in an oligopoly will be a "Kinked" demand curve which may be similar to the traditional demand curves in the Perfect competition, as they are downward-sloping but it will have a kink or a bend.
8 pages (2000 words) Essay
Economics-Market Power, Oligopoly, Monopoly
In addition, this paper will tell Oligopoly theory gives us a rather confused picture of the relationship between economic profits and market structure" Has empirical investigation of this relationship helped us to clarify the picture? Why might it be argued that it takes only a few rivals competing in the same market to achieve an outcome very close to that of large numbers 'perfect' competition? Does it make much difference if the rivals can cooperate with one another?
13 pages (3250 words) Essay
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
4 pages (1000 words) Essay
Monopoly: Definition and History
In the field of economics, a business or a company is said to have monopoly power if it has significant power in the market or if it is a single supplier of a particular product. Other two common characteristics of a monopoly include excessive barriers to entry in the market to retain the amount of market power
3 pages (750 words) Essay
Theories of competition perfect competition, oligopoly and monopoly suggest a relationship between market structure, conduct and performance (S-C-P). Discuss the strengths and weaknesses of the S-C-P paradigm and comment on its usefulness for fir
The nature of businesses change as their external environment varies. The developed and advanced nations tend to create a mechanism that ensures that the businesses must pay all taxes while serving the society in a reasonable manner. The governments of developed nations
11 pages (2750 words) Essay
Monopoly and Oligopoly
Here are some firms under oligopoly market structure; fast-food companies such as McDonald, Wendy’s, and Burger King. Wireless network providers in the U.S. also falls under oligopoly market structure. Sprint, AT&T, T-Mobile,
2 pages (500 words) Essay
Perfect competition, monopolistic competition, oligopoly and monopoly
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
6 pages (1500 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Contact Us