How would you argue that the major cheese producers, such as Kraft and Sargento, are oligopolistic?

How would you argue that the major cheese producers, such as Kraft and Sargento, are oligopolistic?

Expert Solution

The main feature of an oligopoly market is that it consists of few sellers but a large number of buyers. Also, changes in the price of a product by one seller will affect the price of a similar product by the other oligopolist, i.e. the actions of one of the sellers has an impact on the entire market including price and output functions.

Kraft and Sargento are the two major players in the American cheese market. The total market share of Kraft is 25.8% and that of Sargento is 5.8% making both of them the highest market players. Also, they offer similar flavors of cheese. This checks the closely differentiated homogeneous product feature of an oligopoly. It would seem reasonable to say that because they are not different and have the same offerings that consumers would choose the product that is less expensive. Therefore, a change in the price of a product of Kraft will definitely affect Sargento's offerings.

Hence, both the companies possess oligopolistic characteristics.

Rahul Sunny answered 2 years ago

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How would you argue that the major cheese producers, such as Kraft and Sargento, are oligopolistic?

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