Question

Describe an oligopolist market of your choosing. What potential non-legislative changes might take place in that market which would convert it to a monopolistic competitive market? If replying to someone else's scenario, what changes might convert the oligopoly structure to more of a monopolistic-competitive structure?

Answer 1

Oligopoly & Monopolistic competition
Oligopoly market structure refers to a very few number of sellers either with same or differentiated products. Each firm may hold large share of the market and are having high influence in the market. They may form collisions in order to price higher to the consumers and attain higher returns through functioning together. Higher barriers to entry and other features make the market different. Monopolistic competition is the market of many sellers with goods which are close substitutes, not perfect ones. Every firm may not have high influence or higher market share increasing competition between close substitutes. Low barriers to entry make the market competitive and efficient.
Collision in the oligopolistic market increasing price of the commodities can attract close substitutes to the market reducing the barriers in the future. Close and effective substitutes can change the structure to a monopolistic competition. Technological changes and new inventions with cheaper cost can make the market a monopolistic competition. Consider the mobile market and the operating system markets. In the period of beginning, with very few companies charging higher prices and less option of operating systems was more an oligopoly. Even now, the operating system market is moreover oligopoly; the mobile market becomes monopolistic competition with substitutes and is close. This change is due to technological improvement reducing price and barriers to entry.