Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Main Characteristics Of Oligopoly

tag 19 Downloads6 Pages 1,405 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Questions:

1. What are the main characteristics of an oligopoly? Give real world examples.
2. Why could the market for chewing gum be said to be oligopolistic?
3. Why do you think that firms choose not to compete on price?
4. What are the main barriers to entry in the chewing gum market?

Does The Intricacy of The Topic Intimidate You?

 Tame Your Fear with Unmatched Assignment Help Services from Professional Writers

 
 

Answers:

1. Main Characteristics of Oligopoly

Oligopoly is an important market type in which there are few firms that accounts for producing and selling a product. In simple words, it can be best described as a market situation which explains competition between the two. It is therefore identified as a kind of imperfect market situation where there are few firms in the market and they are known for producing homogenous product or they account for producing products which are close but not the perfect substitute of each other. An analysis of this market type indicates that there are certain major unique characteristics of this market type (Sloman and Smith, 2011). These characteristics are briefly summarised as follows:

  • Interdependence: This is an important characteristic of oligopoly market situation. The firms in such market condition are interdependent in making important decisions. This is mainly because there are few firms, and any changes made by one firm will have immediate effect by others in the market to address such competitor’s move. There is a direct influence of decisions that are taken by a firm over its rivals in oligopoly, and this leads to higher level of interdependency in such market structure (Sloman, 2007).
  • Few sellers: There are few sellers in such oligopoly market that accounts for meeting out the needs and requirements of their customers. Example includes Wrigley and Cadbury Schweppes. Oil industry can be oligopoly for example because it includes OPEC the major seller (Sloman and Smith, 2011).
  • Barriers to Entry: This is another important characteristic of oligopoly market structure, and it suggests that oligopoly firms are larger enough to achieve economies of scale. They have huge amount of know-how and capital which makes it difficult for the new seller to enter into the industry and compete with these already established firms. For example, it would be difficult for a new chewing manufacturing firm to enter into the industry because of such great presence of Wrigley and Cadbury Schweppes in such market (Gwartney, Stroup and Clark, 2014).
  • Prevalent Advertising: Oligopoly firms are known for performing the advertisement at the national levels.

These are some of the basic characteristics of oligopoly firms which make them different from that of their competitors.

2. Market for Chewing Gum as Oligopoly

The market for chewing gum can be regarded as oligopoly market condition because it satisfied the important characteristics of being an oligopoly firm. As for instance, the important feature of oligopoly as noted above signifies that in oligopoly market, there are few firms occupying majority of the market share. In respect to the chewing market as well, it is the Cadbury Schweppes and Wrigley that have dominated majority of the market share. This is an important characteristic of oligopoly market condition. Secondly, it has also been evaluated that it is extremely difficult for a new market player to enter into such industry because the existing firms are operating at a large level and they have already achieved economies of scale. As a result, it becomes difficult for the new player to enter into such industry. In respect to the chewing gum market as well, Wrigley and Cadbury Schweppes have established their brand reputation. This is therefore an important indicating factor that the market condition of chewing market satisfies the oligopoly market structure. The point of interdependence is also evident in respect to the performance of Schweppes and Wrigley because the major decisions as undertaken by a firm has an impact over the others. All these reasons lead to conclusion that the market for Schweppes and Wrigley are considered as oligopoly market (Sloman and Smith, 2011).

 

3. Reasons for Firms Choosing not to Compete on Price

Competition is an important phenomenon that is evident in respect to the performance of an industry. Businesses compete with each other with a view to achieve larger market share so that they can sustain their growth and development. However, an important factor in this regard as applicable is mainly in respect to oligopolistic market situation. It is analysed that businesses in respect to such market condition of oligopoly do not compete with each other on price. There are a large number of reasons behind it. The first major reason could be the immediate move by other firms in the industry. As analysed above, there is an interdependency factor in respect to oligopoly firms, and the move of a single firm would result into the retaliation by other. As a result, a price increase/decrease will result into an immediate action by other which could affect their market share and position in the industry (Sloman, 2007).

Apart from the above reason, there could be other major reasons for which the firms choose not to compete on price. As for instance, there are few major firms that dominate the entire industry. As a result, it has been a good opportunity to them in achieving higher level of growth and success on their performance rather than competing with each other on price. By mutually setting up prices at reasonably higher level, it could be possible to ensure higher level of growth and success of the firm. In addition to this, the case study analysis has also indicated that oligopoly firms make slight differences in their product as compared to their competitors, and this particular strategy allows them in achieving higher growth and success. As a result of these particular reasons, there are lower chances of oligopoly firms competing on price levels (Tanter and Ullman, 2015).  

4. Main Barriers to Entry in the Chewing Market

The case analysis of the chewing market has been performed and the performance of analysis indicated that there are certain major barriers to market entry that are evident within it. As for instance, the most significant barriers to entry as noted is mainly the nature and characteristics of such market. It has been analysed that the market structure is Oligopoly market structure whereby the majority of the market share has been occupied by the two major players including Cadbury Schweppes and Wrigley. As a result, they would not allow the third party to enter into the market and perform sharing in their market share. Apart from this particular barrier, another major barrier that has been noted is mainly in terms of the capital needed for investment. The capital needed is huge to enter into such market conditions which could adversely affect the motivation of new companies to enter into the industry. This is therefore also regarded as a major obstacle in the process of performing the entry into such industry (Ghai and Gupta, 2002).

Apart from these major barriers, the analysis of the chewing gum industry also indicates that it is essential to have good brand reputation in such industry to succeed. Even though some companies would infuse huge capital in performing the start-up of their venture, but the most important criterion is their brand image and reputation in the industry. For a new firm, it is extremely difficult to build up reputation in a short span of time. As a result, brand reputation along with the capital needed is the major constraints that could impact the desire of a new firm to enter into a particular industry. In addition to above all factor, the existing firms would not allow a new firm to set in the industry. They would not be willing to share their market share with the firm which could be identified as a major factor affecting the desire of a new firm to enter into the industry. Thus, an analysis above has indicated the oligopoly characteristics, and the major characteristics of such market structure.

 

References

Ghai and Gupta, (2002), ‘Microeconomics Theory And Applications’, Sarup & Sons.

Gwartney, J.D., Stroup, R. and Clark, J.R. (2014), ‘Essentials of Economics’, Academic Press.

Sloman, J. (2007), ‘Essentials of Economics’, Financial Times Prentice Hall.

Sloman, J. and Smith, P. (2011), ‘Economics Student Workbook’, 8th ed., Pearson Education, Limited.

Tanter, R. and Ullman, R.H. (2015), ‘Theory and Policy in International Relations’, Princeton University Press.

OR

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2017). Main Characteristics Of Oligopoly. Retrieved from https://myassignmenthelp.com/free-samples/main-characteristics-of-oligopoly.

"Main Characteristics Of Oligopoly." My Assignment Help, 2017, https://myassignmenthelp.com/free-samples/main-characteristics-of-oligopoly.

My Assignment Help (2017) Main Characteristics Of Oligopoly [Online]. Available from: https://myassignmenthelp.com/free-samples/main-characteristics-of-oligopoly
[Accessed 08 December 2019].

My Assignment Help. 'Main Characteristics Of Oligopoly' (My Assignment Help, 2017) <https://myassignmenthelp.com/free-samples/main-characteristics-of-oligopoly> accessed 08 December 2019.

My Assignment Help. Main Characteristics Of Oligopoly [Internet]. My Assignment Help. 2017 [cited 08 December 2019]. Available from: https://myassignmenthelp.com/free-samples/main-characteristics-of-oligopoly.


At MyAssignmenthelp.com, we are committed to deliver quality assignment assistance in the fastest way possible. To make our service delivery fast, we have hired subject matter experts to work on different subject specific assignments. We have hired experts who owe in-depth knowledge in their respective subjects. As per their expertise, they provide geography assignment help, Physics assignment help, Strategic assignment help, history assignment help, art architecture assignment help and assistance with other subjects as well.

Latest Samples

HI5017 Managerial Accounting 2

Download : 0 | Pages : 13

Answer: Introduction In today’s world, Budget is a commonly used term, be it in the corporate environment or in the household. To state in simple words, a budget is nothing but just a tool used for managing the finance. It helps in planning the expenses and income for a given period so that a person can inculcate a habit of savings and thrift. In the absence of a pre-defined budget, a person will not be able to save money systematically...

Read More arrow

PRT503 Entrepreneurship For Professionals

Download : 0 | Pages : 10
  • Course Code: PRT503
  • University: Charles Darwin University
  • Country: Australia

Answer: Introduction The number of education business is increasing rapidly all over the world due to the high demand of higher studies but the candidates need to adopt different skills and through career mapping program to get different job opportunities (Dees, 2017). Additional skill development and quality training program are essential for the candidates to get huge competitive advantages during the interview process (Parker, 2018).  ...

Read More arrow

LAWS20059 Corpotation And Business Structure Law

Download : 0 | Pages : 9
  • Course Code: LAWS20059
  • University: CQ University
  • Country: Australia

Answer: Introduction When a person decides to start a business, it is important for the person to identify what type of business structure is best for him. The individual should decide whether to start sole trading, partnership, company or trust. Selection of a wrong business structure could have disastrous consequences such as insolvency or loss of everything. In this report, partnership and company structure will be analysed to identify the...

Read More arrow

BSBHRM501 Manage Human Resource Services

Download : 0 | Pages : 7

Answer: Introduction The HRIMS survey was done inorder to to get the effectiveness of the HR department and the process in which selection process is determined. It is also to get a feedback if the HR is oing a good job or not. Also, completing the questionnaire will show if the HR department is doing a goo job. This is a survey to help the staff in better HR management. Human resource management informations system(HRMIS) is an online solut...

Read More arrow

BSBHRM501 Manage Human Resource Services

Download : 0 | Pages : 7

Answer: Introduction The HRIMS survey was done inorder to to get the effectiveness of the HR department and the process in which selection process is determined. It is also to get a feedback if the HR is oing a good job or not. Also, completing the questionnaire will show if the HR department is doing a goo job. This is a survey to help the staff in better HR management. Human resource management informations system(HRMIS) is an online solut...

Read More arrow
Next
watch

Save Time & improve Grades

Just share your requirements and get customized solutions on time.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,159,012

Orders

4.9/5

Overall Rating

5,050

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

798 Order Completed

97% Response Time

Benjamin Blakeman

MSc in Medical Technology

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

752 Order Completed

100% Response Time

Hugh Cleave

Masters in Human Resource Management (MMgt, HRM)

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

529 Order Completed

95% Response Time

Ivan Blank

PhD in Functional Human Biology

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 4/5

3076 Order Completed

99% Response Time

Emily Wei

Doctor of Philosophy (Ph.D) in Civil Engineering

Singapore, Singapore

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

as i have secured good marks in this subjects it is only because of the content which is up to the mark

flag

User Id: 273565 - 08 Dec 2019

Australia

student rating student rating student rating student rating student rating

I got a good improvement on my presentation even though initially there was a misunderstanding between me and the support team. Writer did an amazing job and improved my slides a lot

flag

User Id: 111069 - 08 Dec 2019

Australia

student rating student rating student rating student rating student rating

The assignments which you done is very useful for me and I got good grade for those assignemnts and very useful content.

flag

User Id: 332654 - 08 Dec 2019

Australia

student rating student rating student rating student rating student rating

Great work and super fast with the delivery. The quality of work always super exceeds my expectations and I am a happy customer

flag

User Id: 311431 - 08 Dec 2019

Australia

student rating student rating student rating student rating student rating
Have any Query?