Oligopoly

Oligopoly

A market in which few sellers are available and sell their products. There product will be homogeneous or different in quality. The firm will be three, five or seven. We are not sure about how much they are but they are few. So some time, we also mention competition between few firms. They are few firms so they are able to influence each other buy decision making.

Oligopoly

Characteristics of Oligopoly

ü  Competition – it is a part of the oligopoly markets because there are few firm and they influence each other buy decision making

ü  Inter-dependence - firm are inter-dependence because they aware about market & value of advertisement & pricing policy

ü  Advertisement – a firm spent lot of amount on advertisement to show his presence in the industry

ü  Barriers for new firm – due to fast competition, there are no ban for new one but in the long run particular firm face lot of difficulty regarding cost, production scale or patient etc

ü  Different size – in this market all firm not have the same size. Some-one is big and other is small in size

ü  Demand curve – it is very difficult to draw a demand curve in this market. We do not know about accurate production behaviour and decision making. So it becomes a lengthy structure but we mention it as a ‘kinked Curve’.

Revenue in different types of market

Revenue in different types of market        

Pure competition – in this market every manufacturing produce same types of goods & services. There are lots of manufacturing units available in the market. Demand & supply balance the market and fix the price in the market. The price is also same in the whole market.

Revenue in Pure Competition

Monopoly or imperfect competition – in this market, only one manufacturing units available in the market and market demand is already given. Manufacture adjust its price its own. Average revenue is down in the slope and marginal revenue stand below its AR. Company know the demand and they sell the more quantity on a lower price that way MR below the AR.

Revenue in monopoly

Oligopoly – in this market, there are few manufacturing units and also their behaviour influences the other unit’s policy. If a company increases their price then other company not follows the same because consumer always prefer to buy a cheaper/low price things. In this market AR & MR are down in slope. MR put down or below the AR line but they are not in direct down but there are lot of kinks in the line.

Revenue in Oligopoly