Question

In general, Compare the social efficiency of oligopolistic market outcomes to perfectly competitive market outcomes and monopoly outcomes.

Answer 1

An Oligopoly Market is a market under which the market is influenced by the small groups of sellers. Oligopoly results the market competition reduce and give rise to higher prices for consumers, so oligopoly is not that much socially efficient. But it will be efficient by fixed in prices by the Government.

Whereas, In Perfectly Competitive Market the Price is equals to Marginal cost, which indicates the profit is maximised so the perfectly competitive market is more socially effective and efficient of outcome and a consumer consumes good not at higher prices which they should pay and it also give rise social benefits to consumers.

A Monopoly market is a market, where there is a single seller of a product in the market and the seller have full control over the market. As single seller in the market, seller have no competition in the market, so sells his product at higher prices as he is free of competition. This Market is inefficient in production because of a single seller, so its social outcome is not efficient.