Introduction Of Oligopoly

Varun Vasudeva

BBA.LLB 13’

20131365

OLIGOPOLY

Contents:

Thesis ( A factual brief for the research paper)

Introduction

Domination

Types and Aspects

Thesis:

Reasoning and analyzing a common and a well known form of a modern day market, OLIGOPOLY. Adjudging the ways of their profit maximization and equilibrium attained via cooperation and competition.

Introduction:

An industry in which a few big firms dominate the other firms is called an Oligopoly. An average oligopoly might have a dozen firms or even hundreds of them but most of them hardly matter in relevance to other huge firms. These big firms usually dominate the market and make the so called structure called as oligopoly. The firms in such a market structure tend to react to changes made in quantity produced and prices by other competing firms in different manners. Due to such changes, all the firms tend to sell homogeneous or differentiated products. When the firm happen to choose their mode of production individually, they tend to fall somewhere between perfect competition and monopoly through the following ways:

The quantity of output produced by the oligopoly is greater than the level produced by a monopoly but less than the level produced by a competitive market.

The oligopoly price is less than the monopoly price but greater than the competitive price (which implies that it is greater than the marginal cost).

Domination:-

How do they dominate?

The huge firms in an oligopoly have an role in determining the price of commodities and deciding the modes of production. On the other hand, the small firms survive with these giant firms in the same market by selling the products which the larger firms are not willing to sell.

Occurence:

There are certain reasons behi...

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...ly, however, that Pepsi or Coke know with perfect certainty how their rival will react to the current strategy. They do have, however, some general sense of what is most likely to occur and they take into account this anticipated response when they design their current competitive strategy.

I would like to return on the rowboat analogy. When you stand up for the first time in the small rowboat, perhaps the two other passengers yelled at you with scowled looks on their faces. As a consequence you must have sat down not wanting to incur the wrath of your fellow passengers. Ten minutes later you think to stand up for the second time but you decide to stick to your seat because of the repeated interactions and events that happened in the past. You are able to take these interactions into account happened before as you decide what to do—or not do—in the current moment.