Is Collusion Possible
1. Introduction.
In this essay I would discuss the price and output determination under the one essential type of imperfect competition markets- oligopoly. Inter-firm interactions in imperfect markets take many forms. Oligopoly theory, those name refers to "competition among the few", lack unambiguous results of these interactions unlike monopoly and perfect competition. There is a variety of results derived from many different behavioural assumptions, with each specific model potentially relevant to certain real-world situations, but not to others.
Here we are interested in the strategic nature of competition between firms. "Strategic" means the dependence of each person's proper choice of action on what he expects the other to do. A strategic move of a person influences the other person's choice, the other person's expectation of how would this particular person behave, in order to produce the favourable outcome for him.
2. Two types of behaviour (Collusive and non-collusive).
Models of enterprise decision making in oligopoly derive their special features from the fact that firms in an oligopolistic industry are interdependent and this is realised by these firms. When there are only a few producers, the reaction of rivals should be taken into account. There are two broad approaches to this problem.
First, oligopolists may be thought of as agreeing to co-operate in setting price and quantity. This would be the Collusive model. According to this model, firms agree to act together in their price and quantity decisions and this would to exactly the same outcome as would have been under monopoly. Thus the explicit or co-operative collusion or Cartel would take place.
Second approach of the oligopoly analysis is based on the assumption that firms do not co-operate, but make their decisions on the basis of guesses, expectations, about the variables to which their competitors are reaching and about the form and the nature of the reactions in question. The Non-collusive behaviour deals with this model. Here, though in equilibrium the expectations of each firm about the reactions of rivals are realised, the parties never actually communicate directly with each other about their likely reactions. The extreme case of this can even imply competitive behaviour. Such a situation is much less profitable for firms than the one in which they share the monopolistic profit. The purpose of this paper is to analyse the case of the possibility of collusion between firms in order to reach the monopolistic profits for the industry, assuming that they do not co-operate with each other.
“Sears is the leading retailer in home appliance, tools, lawn and garden, electronics, and automotive repair and maintenance. They are also the largest home service provider and answers over 11 million service c...
Analysis of profit oligopoly identical as monopoly profits: in the short term it can get positive, zer...
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
...he same kind of information for the women who lived and were involved with Charlemagne. All we know about them is from the eyes of Einhard. We can learn from reading his texts that Einhard thought that Charlemagne’s mother and sister where honorable, virtuous women. Since Charlemagne’s daughters never married and where educated side by side with their brother we can get the feeling that Charlemagne was a dotting father. Einhard did not particularly agree with Charlemagne’s actions. Finally, we can see that Einhard thought any woman that went against Charlemagne was irrational, whether or not she had good reason for her actions. Since not many works survived the Carolingian society Einhard provides a unique perspective of the lives of the woman that lived in this period. These women, no matter their role or position, would have forever remained nameless and unknown.
The oligopoly market is a few relatively large firms that have adequate to significant market power and that they recognize their interdependence. Each firm know that their choice of actions or changes in their outputs will have an effect on other firms and in response to the change, other firms will take actions accordingly to adjust therefore will affect its sales and revenue. (Thomas 428) To closely define, the oligopoly characteristics consist of (a) a few large dominant firms; (b) a product or services either standardized or differentiated; (c) firm’s decision on price and output affect the demand and marginal revenue of other firms in the market and vice versa; and (d) the entry barriers to become a dominant firm consist of substantial involvement of technology and economical terms. With these characteristics, there are usually as few as two and as many as ten firms that make up large market shares in any one particular industry.
For over 100 years, the automobile industry has relied on gasoline as its main source of fuel. Gasoline is a colorless, highly flammable substance used in internal combustion engines. It is a fossil fuel made from crude oil, a natural gas formed from the remains of ancient plants and animals (Webster‘s Dictionary). Gasoline has positively influenced our way of life by providing convenient, on demand transportation. It has created a global economy that moves people and goods faster and more easily than ever imagined (Povey 12). Although a seemingly perfect substance, it has unprecedented flaws. The tremendous political, environmental, and economic problems resultant from the excessive use of gasoline leads to the conclusion that the automobile industry should not continue to rely on this source of fuel.
Shirley Jackson wrote many books in her life, but she was well known by people for her story “The Lottery” (Hicks). “The Lottery” was published on June 28, 1948, in the New Yorker magazine (Schilb). The story sets in the morning of June 27th in a small town. The townspeople gather in the square to conduct their annual tradition, the Lottery. The winner of the lottery will stoned to death by the society. Although there is no main character in the story, the story develops within other important elements. There are some important elements of the story that develop the theme of the story: narrator and its point of view, symbolism, and main conflict. The story “The Lottery,” by Shirley Jackson, argues practicing a tradition without understanding the meaning of the practice is meaningless and dangerous.
Shirley Jackson wrote “The Lottery” in 1948, not long after the second World War. The horror of the Holocaust was still fresh in everyone’s mind’s. Jackson wrote this story to remind everyone that we are not so far from this world of sadistic human sacrifice. She created a town, very much like any American town, with the gathering of the towns people to celebrate some annual event. She wanted to shine a mirror on contemporary society, a reflection of humanity, or rather, inhumanity. One would think that she was protesting against the shallow hypocrites that rule the world.
Monopoly and oligopoly are two economic market conditions. Both of them are likely to co-exist in our world and they differentiate from each other. In this written paper, I will describe the two market conditions. I will describe the characteristics of each one of them in terms of number of suppliers, product differentiation, advantages and disadvantages and the most challenging types of barriers to entry that exist in both of the market structures.
An oligopoly is defined as "a market structure in which only a few sellers offer similar or identical products" (Gans, King and Mankiw 1999, pp.-334). Since there are only a few sellers, the actions of any one firm in an oligopolistic market can have a large impact on the profits of all the other firms. Due to this, all the firms in an oligopolistic market are interdependent on one another. This relationship between the few sellers is what differentiates oligopolies from perfect competition and monopolies. 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).
"The Lottery," a short story written by Shirley Jackson, is a tale about a disturbing social practice. The setting takes place in a small village consisting of about three hundred denizens. On June twenty-seventh of every year, the members of this traditional community hold a village-wide lottery in which everyone is expected to participate. Throughout the story, the reader gets an odd feeling regarding the residents and their annual practice. Not until the end does he or she gets to know what the lottery is about. Thus, from the beginning of the story until almost the end, there is an overwhelming sense that something terrible is about to happen due to the Jackson's effective use of foreshadowing through the depiction of characters and setting. Effective foreshadowing builds anticipation for the climax and ultimately the main theme of the story - the pointless nature of humanity regarding tradition and cruelty.
Therefore, Sears Holding Corporation failed to reach the needs of current and future customers and the fads of society. Both organizations have struggled with offering outdated brands, merchandise, and store layouts. Further, there was little to no attempt to rebrand any part of their organization.
One main thing that people may be concerned about today when shopping for a vehicle is efficiency, people are always trying to find vehicles that provide the best fuel economy. What many people do not know are the advancements and environmental factors that diesel engines provide and protect. People are also unaware of the great mileage that these vehicles can provide. With the new ULSD and the new diesel engine technology, people can see mileage up to 58 MPG with a Volkswagen Jetta
Clearly, it is an attractive prospect for any firm to be in the position of a monopoly. That is why, firstly, the incumbent firm will want to deter potential entrants, and secondly, why potential entrants want to enter. Throughout this essay, strategies that can be adopted by a firm in a monopolistic position, with the goal of deterring entrants will be discussed and analysed.
Porter, M. E., 1999. The Five Forces that Shape Competitive Strategy. Harvard business review, p. 80.