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OLIGOPOLY - market dominated by a few large fims - Coggle Diagram
OLIGOPOLY - market dominated by a few large fims
FEATURES
Few firms - 3+
Different products- close subsitutes, product defrntiation
Large firms dominated
Barriers to entry- for ex: high set up costs
collusion - used to restrict competion
non- price competion- use of advertising, coupons, loyaltity cards, offers to gain competative edge
price competion- prices among firms remain along the smae line as they are affraid of price wars
ADVANTAGES
CHOICE- competion leads to many choices allows small producers to operate the niche market
QUALITY - non price competion. product differnciation by quality
ECONOMIE OF SCALE - lower average costs, lower prices chaged
INNOVATION - higher profit, more investment in r&d, due to competion
PRICE WARS - stale price maily, if firms lower all firs do as well, consumer beifit
EXAMPLES
MOTOR INDUSTRY
Toyota
Volkswagen
GM
Renault-Nissan
Hundai
Ford
COFFE & BREAKFAST
McDonald's
Starbucs
Dunkin Donuts
SREAMING MARKET
Netflix
Amazon
Hulu
DISADVANTAGES
COLLUTION- informal agreement to restrict competion and fix high price
CARTEL - firms join together and agree on high pricing and out put lrvels of marker (illegal)
KEY TERMS
COLLUTION: Informal agreements between firms, used to restrict competion
CARTEL: W here a group of firms or countried join together to ahree on pricing or output in the market
PRICE WARS: where one firm on the industry reduces price causing others to do the same
NICHE MARKET: market for a product or service, perhaps an expencive or unusal one, the does not have many buyers, but that may make good profits for the company that sells it.