Question

Give some examples of oligopolies in the US, compare them, and explain why they are not regulated.

Use economic definitions in your response.

Answer 1

The one example of oligopoly is telecom industry in the USA. It is an industry with few players such as AT&T, Verizon and T mobile among the others. The telecom industry is an oligopoly market, because it has high entry barriers in the market in terms of huge investments. The second oligopoly market is postal and courier services in the USA. IT also has very few players that are USPS and FedEx among the others. This oligopoly is based on large size of network, that is creating economy of scale, while telecom industry is based on huge investments that brings economy of scale. These industries are not regulated, because these industries are market drive, and already under the umbrella regulation of Sherman Act and Clayton act. So, firms in these industries are unable to form cartel, collusion or price fixing. Hence, there is no direct regulations, but anti-competitive regulations are already in place that covers all the markets in the USA.