Question

How would you contrast the efficiencies of oligopoly with those of monopoly?

Answer 1

If a market contains a single firm which mainly produces goods that too with no kind of close substitute then it is a monopoly market but in case of an oligopoly market it has very small number of relatively large firms which mainly produces similar products with a slight difference.

Monopoly is a kind of market which is dominated mainly by a single seller. Monopoly occurs only when single firms produces goods or products with no kind of close substitute but in oligopoly two or more firms which will mainly control the market with no kind of influence that too from the industry

The efficiencies of oligopoly

• In contrast to monopoly the oligopolists are highly dependent mainly upon their rivals actions while they make business decisions.
• In case of oligopoly it is a form of market where we can only see a small number of sellers and some significant barriers to entry.
• Prices over here are moderate it is only because of the presence of competition. That means, if one firm sets a price the other firms will also sets the same price or do the same thing as them only to remain competitive and suppose if one firm drop it's it's mainly for their consumers the others will also follow the same suit.
• Here ,in the industry there is no kind of dominant force the firm's mainly over here will collude eachother instead of competing.
• It mainly adopts a highly competitive strategy.
• The barriers towards the entry can be raised by the oligopolies mainly by controlling prices.
• They make their costumer's more loyal by providing higher quality products and mainly by their more frequent services.