Oligopoly essay

Oligopoly essay

1/1/ · Introduction: Oligopoly is imperfect competition and is a situation between the monopoly and perfect competition. Oligopoly is characterised by the dominance of a handful of players in one particular sector where they have products or offerings are very similar in nature and can be either homogeneous or differentiated What Are The Key Features Of Oligopoly Economics Essay This essay shall describe the oligopoly market. The definition of an oligopoly states that in an industry, a small number of firms dominate the market. There are a low number of firms in the industry, becasue and adding to the barriers to entry. The barriers of entry to an oligopolistc market include the financial resources needed to enter and Estimated Reading Time: 6 mins

Essay on Oligopoly - Words | Bartleby

Here is what I feel is a superbly clear and well-structured essay answer to a question on the economic and social oligopoly essay of collusion within an oligopoly. Use game theory in your answer. Collusion between firms is harmful to oligopoly essay. This is because firms collude to raise prices, as mentioned earlier, resulting in the price level seen below.

This reduces the consumer surplus available, oligopoly essay, oligopoly essay the welfare of individuals. This can often be highly regressive, if the impact oligopoly essay increased prices, such as with the Big Six Gas Suppliers, has a disproportionate impact on the less well off.

Furthermore, because firms are working together, with internal quotas to divide up sales, there is less need to compete, oligopoly essay, resulting in less dynamic efficiency. This results in less innovation, and thus little improvement in the quality of products available to individuals.

However, oligopoly essay, collusion between firms can often derive benefits for consumers. This is a case in which firms are technically engaging oligopoly essay tacit collusion, but which may oligopoly essay result in driving down of prices as firms seek to match improvements in cost efficiencies made by other firms.

This is also true with products such as mobile phone contracts where it is easy to compare prices. Collusion in an oligopoly can hugely benefit firms, oligopoly essay, which can have beneficial consequences for society. For instance, collusion between coffee growers allows small firms to push for fairer prices against more dominant monopsonistic corporations such as Starbucks.

Furthermore, because these producer cooperatives like Fairtrade are often based overwhelmingly in less developed regions, this can also be useful in helping to alleviate extreme poverty. Furthermore, collusion allows for firms to lower the costs of competition, that can then be passed onto consumers.

Because oligopolies exist in highly concentrated markets dominated by a few firms, there is often a huge degree of branding and differentiation that needs to take place in order for firms to stand out, e. with the UK retail banking industry with firms such as Barclays and HSBC. If all firms engage in marketing wars, there is no net societal benefit. However, if firms collude, oligopoly essay, they can reduce the need to fund these marketing wars, that can allow for cost savings to be passed onto consumers, oligopoly essay.

Additionally, collusion allows for agreed upon industry standards, for instance with oligopoly essay in testing on humans in pharmaceutical research, which benefits both consumers and firms. However, the extent to which this oligopoly essay depends on a few factors.

Furthermore, the benefits that accrue from firms working together are dependent on those firms passing those cost savings onto consumers - however, if they are all explicitly colluding, they may decide to spend that money on share buy-back schemes and dividends, oligopoly essay, which may not benefit society at large.

Indeed, inoligopoly essay, US firms spent more money on share buy-backs than they did on research and development. Lastly, the benefits from firms agreeing upon industry standards are likely to be very marginal given the government and regulatory bodies, such as the Financial Conduct Authority FCA tend to set industry standards centrally.

In conclusion, the extent of the impact on consumers and firms depends fundamentally on how long the oligopoly is able to carry on collusion - we can analyse this through game theory. Assuming the following pay offs in a cartel such as OPEC, where states agree to collude to reduce production levels and benefit from a higher price:.

If all firms cooperate, they will achieve £4bn revenue. However, if one firm decides to defect and to increase production while still gaining from higher prices, they will gain £5bn. The socially optimal equilibrium in oligopoly essay model for firms is to cooperate, because the total utility is greater than any other option. However, this is an unstable equilibrium: no matter what the other firm does, each agent is better off by defecting, resulting in oligopoly essay Nash oligopoly essay of Defect, Defect.

Thus, the effects of collusion are very much dependent on how long it is able to last. More resources available here on the topic of oligopoly. Company Reg no: VAT reg no Main menu, oligopoly essay.

Subjects Shop Courses Live Jobs board, oligopoly essay. View shopping cart. View mytutor2u. Account Shopping cart Logout. Explore Economics Economics Search. Explore Blog Reference library Collections Shop. Economics Explore Overview Latest Topics Watch now. Exam Technique Advice Essay on Oligopoly and Collusion Level: A Level, IB Board: AQA, oligopoly essay, Edexcel, OCR, IB, Eduqas, WJEC.

Share: Facebook Twitter Email Print page. EVAL 1: However, collusion between firms can often derive benefits for consumers. KAA2: Collusion in an oligopoly can hugely benefit firms, which can have beneficial consequences for society.

EVAL 2: However, the extent to which this occurs depends on a few factors. Conclusion: In conclusion, the extent of the impact on consumers and firms depends fundamentally on how long the oligopoly is able oligopoly essay carry on collusion - we can analyse this through game theory, oligopoly essay. Assuming the following pay offs in a cartel such as OPEC, where states agree to collude to reduce production levels and benefit oligopoly essay a higher price: If all firms cooperate, they will achieve £4bn revenue.

Author: Cary Oligopoly essay February More resources available here on the topic of oligopoly. Economics Exam Technique Advice Collusion Tacit collusion Overt collusion Game Theory Nash Equilibrium Oligopoly. Facebook Twitter YouTube Instagram LinkedIn. Our subjects Our Subjects. Explore Explore. Contact Contact.

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Oligopoly Essay

1/1/ · Introduction: Oligopoly is imperfect competition and is a situation between the monopoly and perfect competition. Oligopoly is characterised by the dominance of a handful of players in one particular sector where they have products or offerings are very similar in nature and can be either homogeneous or differentiated This essay shall describe the oligopoly market. The definition of an oligopoly states that in an industry, a small number of firms dominate the market. There are a low number of firms in the industry, becasue and adding to the barriers to entry. The barriers of entry to an oligopolistc market include the financial resources needed to enter and Estimated Reading Time: 6 mins 17/6/ · You May Also Find These Documents Helpful Oligopoly Market Structure Essay. Few firms dominate Although only a few firms dominate, it is possible that many small Collusion in Oligopoly Essay. Sourced from: blogger.com, A2 micro: Oligopoly and Collusion. Monopolies Oligopolies Notes