Question

List and explain 7 benefits of oligopolistic competition. Whilst also list and explain 7 benefits of monopolistic competition

Answer 1

7 advantages of oligopolistic competition:

• An oligopolistic competition can adopt a competitive strategy and allow for lower prices.
• oligopolistic competition results in more information to consumers.
• oligopolistic competition allows for more product refinement dynamically and result in efficient innovation and new products.
• The additional profits earned from oligopolistic competition can be put to research and development.
• It can bring price stability to the market.
• Price competition can use discounting the price of productions to increase the market share.
• Oligopolies may be highly competitive, where they can generate benefits similar to more competitive market structures.

7 benefits of monopolistic competition:

• In monopolistic competition there are no significant barriers to entry; thus markets are contestable.
• Differentiation creates diversity, choice and utility.
• The market is more efficient than monopoly.
• they may also be dynamically efficient and bring innovative processes or products.
• The ability to set own prices.
• Brands and product differentiation strengthens the need to maintain high quality products.
• the differentiated products give consumers a lot of variety.

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