Question

Oligopoly is a case where a few businesses taking over an entire industry and reducing competition. Do you think it affect our pocketbooks? Why?

Answer 1

A very good example of this would be in the market for computer software. Initially there was only Apple that was the only player in the market. Over time there have been several players like Oracle,microsoft and HP that have come into the market and have hence increased competition. Over time however, there are only a few firms that have dominated the market. This forms the basics of an oligopolistic market structure in that a few firms dominate the market and hence push up the market price. This will effect the average consumer in that will increase the prices that he would pay as compared to a more competitive market where the prices would be lower in the event that several players are present. In this way it reduces the savings that people have. Oligopolistic market structures also put out several offers and campaigns that attract consumers.This is an effect actually makes the consumer save less. Thus oligopolistic markets will make the consumer spend more.