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Duopoly market structure
Duopoly market structure
Duopoly market structure
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How to be a Successful Oligopolistic Firm in the Long Run
It is a well-known fact that every firm wants to be successful in its business. Sometimes it is difficult to decide what kind of actions to take in order to achieve it. Especially, it is hard on oligopoly market because this is one of the most complicated market structures. Oligopoly includes many models and theories such as duopoly where are just two producers and which pricing decisions remind monopoly, kinked demand curve, which decreases economic profit, and cartel, which brings economic profit just for the short-run. However, to be a successful oligopolistic firm in the long run, managers should include in the planning process such economic theories and models as producer interdependence, the prisoner’s dilemma, price leadership, nonprice adjustments, and correct using of barriers to entry.
The essential factor of an oligopolistic firm is interdependence. Oligopoly involves few producers, which means more than one producer as it is in pure monopoly but not so many as in monopolistic competition or pure competition where it is difficult to follow rival firms’ actions. Therefore, due to small number of producers on oligopoly market, the price and output solutions are interdependent. As a result, firms can cooperate or come to an agreement profitable for everyone. Therefore, they can increase, as it is possible, their joint profits (Pleeter & Way, 1990, p.129). Further, oligopoly is divided on pure, which is producing homogeneous products, and differentiated, producing heterogeneous products (Gallaway, 2000). Economists Farris and Happel insist that the more the product is differentiated, the more firms become independent, and the more the product differentiation, “the less likely joint profit maximization exists for the entire group” (1987, p. 263). Consequently, it is worth to be interdependent.
Another factor on the way to success on oligopoly market is understanding and using with advantage the game theory, in particular, prisoner’s dilemma. Game theory, a mathematical approach to strategic behavior, was stated by John von Neumann and Oscar Morgenstern in 1944 (Farris & Happel, 1987, p. 267). Game theory is useful in analyzing the actions in any strategic situation, from a game of chess to the pricing and output decisions of oligopoly firms where firms cooperate or conflict. The classic game is the prisoner’s dilemma:
Numbers are years in prison for each arrested player considering different behaviors of each prisoner.
A Rumor of War gives a first hand account of what really happened during wartime in Vietnam. It is told in first person as the author Philip Caputo was a young marine serving during the time of war. This book describes the time from his ambitious young ego to later when he realizes the harshness of war. He describes the story from him sitting at a desk at training to exhilarating battles. He even goes into describing the aftermath that war can place on a person. He tells this story through his own eyes and thoughts.
...f the innocent is what captured my attention the most. Hundreds and thousands of innocent civilians were killed for simply being in the wrong place at the wrong time. Caputo mourns not only for the dead, but also for the men that are now emotionally and psychologically scarred for life. The images and sounds of death will forever be carved into their minds. Throughout this history class, I have been able to learn and understand new vocabulary and apply it to my reading. I would not have been able to understand the book, as well as I do, without becoming familiar with the terminology. A Rumor of War changed by view on the Vietnam War. Before reading this narrative, I did not realize the number of lives lost or the poor environments soldiers were subjected to. Philip Caputo was extremely detailed in his descriptions and painted a brilliant picture of the war.
with a concentrated market share, an example of an oligopoly today. would be Nike, Reebok and Adidas for shoes. Most industries today are oligopolies, the possible reasons for this. would be that oligopolies in contrast to monopolistic competition. would be able to earn abnormal profits in the long run as well as the short run, as shown in the previous section.
To differentiate monopolies from trusts, it must be said that single companies were able to form monopolies when in control of “nearly all of one type of product or service… [This] affects the consu...
An article discussing the importance of a mission statement states that a mission statements’ job is to outline the organization’s unique purpose and establish the basis of its values and traits, as well as describe the attitude that is to be expected of those a part of the organization. Furthermore, this philosophical foundation sets the “tone” for physical actions, meaning that the content of the mission statement can determine the behavior of personnel (Hitt & Ireland, 1992).
Analysis of profit oligopoly identical as monopoly profits: in the short term it can get positive, zer...
Others added that monopolies produce less output and charge a higher price than a purely competitive environment. The monopolist sets the marginal revenue equal to marginal cost and output is therefore smaller. In monopolies, profits can persist indefinitely, because high barriers to entry prevent new firms from taking part in the
Therapeutic relationship is an essential part of nursing; it is the foundation of nursing (CNO, 2009). The National Competency Standard for Registered Nurses state that nurses are responsible for “establishing, sustaining and concluding professional relationship with individuals/groups.” Throughout this essay the importance of forming a therapeutic relationships will be explained. The process of building a therapeutic relationship begins from prior to time of contact with a patient, the interpersonal skills of the nurse; then the process includes skills required by the nurse to communicate effectively, including respect, trust, non-judgment and empathy. The way to portray these skills can be via verbal or non-verbal cues that are important to understand how they influence a person. The process and skills listed below are all relevant to nurses working in the contemporary hospital environment today.
A university class had watched a video on communicational skills. Subsequently, the students were asked to compose an essay based on several themes displayed in the video. The topic of this essay will revolve around the advantages of therapeutic relationships. This essay will evaluate the effectiveness of therapeutic relationships, effective communication correlating to this, and the benefits it has for the patients. In addition, the ANMC competencies will be assessed and 3 topics from a particular domain will be chosen which are believed to be the most relevant.
Because there are few firms in an oligopoly industry, each firms output is a large share of the market. As a result, each firm's pricing and output decisions have a substantial effect on the profitability of other firms. In addition, when making decisions relating to price or output, each firm has to take into consideration the likely reaction of rival firms. Because of this interdependence, oligopoly firms engage in strategic behaviour. Strategic behaviour means when the best outcome of a firm is determined by the actions of other firms.
Although firms in oligopolies have competitors, they do not face so much competition that they are price takers (as in perfect competition). Hence, they retain substantial control over the price they charge for their goods (characteristic of monopolies). In my discussion I will use the Australian airline industry to present how oligopolies operate, and to show the different behaviours and strategies that arise from the interdependence of firms. I will mainly concentrate on the domestic airline market in Australia. The domestic airline market consists of a duopoly of two firms, Qantas and Virgin Blue.
In the short run, oligopolies are. able to earn abnormal profits, but in the long run as well they are. able to sustain abnormal profits due to the barriers to entry and exit. Then the s The barriers act as a strong deterrent to firms that want to come in. the industry and " eat into" the abnormal profits and then exit the market.
Markets have four different structures which need different "attitudes" from the suppliers in order to enter, compete and effectively gain share in the market. When competing, one can be in a perfect competition, in a monopolistic competition an oligopoly or a monopoly [1]. Each of these structures ensures different situations in regards to competition from a perfect competition where firms compete all being equal in terms of threats and opportunities, in terms of the homogeneity of the products sold, ensuring that every competitor has the same chance to get a share of the market, to the other end of the scale where we have monopolies whereby one company alone dominates the whole market not allowing any other company to enter the market selling the product (or service) at its price.
A monopoly is “a single firm in control of both industry output and price” (Review of Market Structure, n.d.). It has a high entry and exit barrier and a perceived heterogeneous product. The firm is the sole provider of the product, substitutes for the product are limited, and high barriers are used to dissuade competitors and leads to a single firm being able to ...
An oligopolistic market has a small number of sellers dominating market share and therefore barriers to entry are high. These sellers are highly competitive and do not act independently of each other. Access to information is limited so sellers can only speculate of their competitor’s actions. Sellers will take advantage of competitor’s price changes in order to increase market share.