Monopolistic Markets Are Controlled By One Seller Essay examples

Monopolistic Markets Are Controlled By One Seller Essay examples

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Monopolistic markets are controlled by one seller only. The seller here has the power to influence market prices and decisions. Consumers have limited choices and have to choose from what is supplied. The monopolist asserts all the power while the consumer is left with no choice. This market condition usually arises from mergers, take-overs and acquisitions. Oligopoly, on the other hand, is a market condition where numerous sellers co-exist in the market place. This market situation is very consumer-friendly because it induces competition amongst sellers. Competition in turn ensures moderate prices and numerous choices for consumers. A decision taken by one seller in an oligopolistic market has a direct effect on the functioning of other sellers.
A monopolistic market may quote high prices. Since there is no other competitor to fear from, the sellers will use their status of dominance and maximize their profits. Oligopoly markets on the other hand, ensure competitive hence fair prices for the consumer. An oligopoly market has a small number of relatively large firms that produce similar but slightly different products. Again, there are significant barriers to entry for other enterprises. In a monopoly, the seller charges high prices for the goods because there is no competition.
In monopoly the price discrimination exists, different customers have to pay a different price for the same product. In contrast to oligopoly, price remains fixed for a long time. In an oligopoly, the firms set the product price on the basis of the price of the same product offered by the rival seller in the market, which is just opposite in the case of monopoly, as there are no rivals. The reasons for restriction on the entry in the monopoly market can b...


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...untries have dictated oil production and prices to the global economy. This has changed significantly over time as more and more countries become oil producers, but OPEC still has a major role on the global economy. OPEC 's oil embargo of 1973 was a key example of what can happen when producers collude on pricing, where oil prices globally increased over 300% in a few short months.
Both of these market structures are generally going to result in a negative position for consumers, as the consumers will be at the whim or a single company or a limited group of companies. One of the key risks with a monopoly or oligopoly structure occurring is that it can then become nearly impossible for a new competitor to enter the market. Either they could never compete on the same scale, or the monopoly company could afford to sell at a loss or no profit until the new entrant folds.

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