Monopoly
A monopoly refers to a market with only one seller of a particular good or service A monopoly is characterized by a single seller in the market and, therefore, no competition In connection to this, the seller makes abnormal profits as a result of market domination Abnormal profits are realized because there are many buyers in the market, and the seller is the price maker Moreover, the seller controls the good or service prices in that market; there is information asymmetry; consumers do not have complete information; the product does not have close substitutes and there are barriers to entry (Sexton 332)
Oligopoly
An oligopoly is a market that is dominated by few sellers It has two to ten firms in the business competing with each other Oligopoly mostly results from collusion where several firms come together to form a single firm and, therefore, reduce competition Oligopolies compete on the basis of prices, technological innovation, quantity, reputation, or advertising
Oligopolies are characterized by few firms in the business such that the actions of one firm influence those of another The products may be homogenous or differentiated; there is non-price competition where firms compete on other terms apart from prices including differentiated products, loyalty schemes or advertisement; oligopolistic firm are so large that their individual actions affect the market conditions; the firms have perfect information, but buyers have imperfect information
Received on Sun Dec 06 2020 - 16:40:25 CET