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Similarly, airlines in other nations are also a part of an oligopolistic market. It does not matter what the job is, in present times, a computer is a necessity. From construction work to aeronautics, computers are needed to carry out complex calculations. The computing market is one of the industries which can be seen as a monopoly instead of an oligopoly. The reason is, that Microsoft is the leading company when it comes to computer operating systems. Out of all the computers in the world, 80 percent of them run on Windows, an operating system by Microsoft.
Fixing of products price:
Some of the common industry sectors where oligopoly is evident are the aviation industry, media industry, pharma industry, telecom industry, media, etc. So in order to stay relevant, they have to stay a step ahead and always be active. Therefore, the competitors in an Oligopoly Market are less but the competition itself is fierce. Interestingly, the Oligopoly Market demand is marked by kinked demand curves.
There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly influence the others. When one company sets a price, others will respond in fashion to keep their customers buying. But, because the level of competition is still relatively low compared to a free market with many players, prices are usually higher in an oligopoly than they would be in a system of perfect competition.
This creates significant barriers to entry for those wishing to enter the marketplace. Under oligopoly, the exact behaviour pattern of a producer cannot be determined with certainty. So, demand curve faced by an oligopolist is indeterminate (uncertain).
Collaboration between existing Vendors in the Market:
Every other brand in the United States has under 5% of the market share. Presently, smartphones have become an essential part of our life. It would not be wrong to say that they have become second to food because people cannot seem to live without their mobile phones. While people born after 2005 may not be familiar with the advancement of the smartphone industry, mobile phones used to be completely different in the 2000s. Before 2008, mobile phones used to be much smaller in size, mostly with physical keyboards. Each brand used to have its unique operating system and some quirks along with it.
It generates over $53.3 billion in annual revenue and employs over 101,000 people. While most companies in the utility sector make a profit, they are usually heavily regulated by public authorities. The United States has more than 3,300 electric utility companies, with about 200 of them providing power to the majority of people. As of 2019, Ford Motor Company, Toyota Motor Corporation, and General Motors were the top three US car brands, with a combined sale of more than 5.2 million units. Ford was the twelfth-ranked company in the 2020 Fortune 500 list, retaining its position as America’s oligopoly examples in india largest carmaker by revenue for a second consecutive year. She even goes on to say that if the government wants to favour national champions, it is a political decision, and the regulator cannot do much about it.
- It will lead to loss of customers for the firm, which intended to raise the price.
- According to the Cellular Telecommunication and Internet Association, there are 30 facilities-based wireless service providers in the US.
- It is designed in such a way that a single firm can execute selfish behavior or profit-maximizing behavior.
- Every other brand in the United States has under 5% of the market share.
In ancient times, growing food was something that every human participated in, but as time passed, so did the food-producing practices. Traditionally, local markets or vendors were the go-to places to buy food, but it all changed with the arrival of grocery stores. In a similar fashion, people started purchasing products like clothing, footwear, kitchenware, and more from franchises instead of local stores. This gave rise to supermarkets, a place where every product from food to travel needs was available.
Current Examples of Oligopolies
This anti-competitive behavior can lead to higher costs and less favorable terms for consumers. However, no single model can accurately describe the operation of an oligopolistic market because two to ten companies compete in terms of innovation, quantity, price, marketing, and reputation. In economics, an oligopoly can be defined as a market structure wherein a particular industry is dominated by a few large sellers (oligopolists). The main reason for few firms under oligopoly is the barriers, which prevent entry of new firms into the industry. Patents, requirement of large capital, control over crucial raw materials, etc, are some of the reasons, which prevent new firms from entering into industry.
As the market is controlled by top firms such as Merck, Pfizer and Abbott. The entry for new firms in this sector is quite limited and restricted. As the patents are being registered here, it creates a notebook of experience for the future. Advertising is the key characteristic of the oligopolistic market. The firms are supposed to employ aggressive market techniques to defend the competition in the market. Due to interdependence, it is essential for the forms to invest a huge amount in the marketing and promotional activities.
Group Behaviour means that firms tend to behave as if they were a single firm even though individually they retain their independence. One is the brand image and trust they have created in the eyes of consumers, and secondly, there is the lack of players who can stand in front of these three while building trust among consumers. Moreover, their dominance in this sector gets increased as the majority of computer softwares made are compatible with these three operating systems, which in turn is making this oligopoly self-sustaining. Their innovations into their sector also keep them unique, which helps them create an ecosystem that completely sustains their growth. Oligopoly examples include companies that enjoy oligopoly in the market. In this type of market structure, businesses are present in small number and dominate the market, restricting new entries into the market.
But generally, the number is maintained in such a way that the decision and action of one industry or producer must affect and influence the others. Unlike, monopoly market, the oligopoly market produces both kinds of goods, that is identical products and different products. An oligopolistic market is a factor driven market and has interdependence on various factors. Thus, the selling price of the products in this market is quite unstable and varies at different instances. This practice helps in retaining the same earlier share of the market but at lower profits.
Apple and Samsung lead the market not only in terms of sales but also in user satisfaction. According to the American Customer Satisfaction Index, all Apple iPhone and Samsung Galaxy models rank the highest. The smartphone penetration rate has continuously risen over the past decade. Today, the annual revenue from smartphone sales has reached over $70 billion.
Reliance Retail will add 1,500-1,700 more stores to its existing network of 13,000 stores across more than 7,000 cities and towns across India. In the last couple of years, many large businesses fell by the wayside as mounting debt forced them to distress-sell or sell their assets after being put through the insolvency process. Reliance Communications, Reliance Infratel, Essar Steel, Bhushan Steel, Future Retail and Videocon Industries were sold off either through merger & acquisition (M&A) deals or the insolvency process.
Though, it is rare to find pure oligopoly situation, yet, cement, steel, aluminum and chemicals producing industries approach pure oligopoly. As in an oligopoly market, the decision of one firm influences the process and working of another firm. A small change in a small firm has a direct impact on its rivals. There exists severe competition among different firms and each firm try to manipulate both prices and volume of production to outsmart each other. For example, the market for automobiles in India is an oligopolist structure as there are only few producers of automobiles. In this form of market, however, the new entrant cannot easily enter because of barriers.
