List of References 1.
Example, Types and Features Micro Economics! The term oligopoly is derived from two Greek words: Oligopoly is a market structure in which there are only a few sellers but more than two of the homogeneous or differentiated products. So, oligopoly lies in between monopolistic competition and monopoly.
Oligopoly refers to a market situation in which there are a few firms selling homogeneous or differentiated products. In India, markets for automobiles, cement, steel, aluminium, etc, are the examples of oligopolistic market.
In all these markets, there are few firms for each particular product. Under duopoly, it is assumed that the product sold by the two firms is homogeneous and there is no substitute for it. Examples where two companies control a large proportion of a market are: Pure or Perfect Oligopoly: If the firms produce homogeneous products, then it is called pure or perfect oligopoly.
Though, it is rare to find pure oligopoly situation, yet, cement, steel, aluminum and chemicals producing industries approach pure oligopoly.
Imperfect or Differentiated Oligopoly: If the firms produce differentiated products, then it is called differentiated or imperfect oligopoly. For example, passenger cars, cigarettes or soft drinks. The goods produced by different firms have their own distinguishing characteristics, yet all of them are close substitutes of each other.
If the firms cooperate with each other in determining price or output or both, it is called collusive oligopoly or cooperative oligopoly. If firms in an oligopoly market compete with each other, it is called a non-collusive or non-cooperative oligopoly.
The main features of oligopoly are elaborated as follows: Under oligopoly, there are few large firms. The exact number of firms is not defined.
Each firm produces a significant portion of the total output. 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.
The number of the firms is so small that an action by any one firm is likely to affect the rival firms.Second recommendation: Establish complete liability insurance • Main competitors like UPS and FedEx provide services like auto liability insurance to its customers • DHL should focus on implementing this to become more diversified • Insurance assures the customers and makes .
Market-skimming pricing sets a high price at low quality to reap maximum revenues step by step from the market segments, e.g. new high tech products.
Market-penetration pricing sets a low price at high quality to attract a large number of customers and a large market share to .
Example: FedEx, UPS and fax machines are substitutes for the services of the U.S. Postal Service, weakening their monopoly.
Barriers to Entry Barriers to entry are legal or natural impediments protecting a firm from competition from potential new entrants. In addition, many suppliers already have contracts with the major players in the market which makes it difficult for new entrants to get access to them, too.
Another barrier is customer loyalty. FedEx has many regular customers which are loyalty due to its long experience with FedEx. Jul 25, · And because there is price competition, UPS, FedEx, FedEx Ground, and a half dozen other services have become like the airlines -- looking for .
oligopoly in its largest market, U.S. high-service parcel delivery. makes competing at market prices difficult for low-volume entrants.
Compared with FedEx, UPS produces superior margins via greater package volume, concentration on United Parcel Service Inc UPS (XNYS)!