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is oligopoly inevitable in the diamond industry and what components are meeded to ensure that price...

is oligopoly inevitable in the diamond industry and what components are meeded to ensure that price will remain unchanged?

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Yes, oligopoly is experienced in oligopoly market.

Oligopoly is a state of limited competition in which there are small number of producers and sellers in the market

The government has to restrict the the mining of diamond and other minerals hence restricting new entry.

The process of mining itself requires huge capital to undertake hence it acts as a barrier to many who would have wanted to invest in mining diamond.

Explanation:

Components that ensure that prices remains unchanged

  1. Government intervention - sometimes the government can set the the price in order to regulate and ensure the stability
  2. Low demand - when the demand is low and the supply is high, it helps keep the prices stable
  3. Existence of competitors - competitors help keep the firms and their prices stable since they will all want to be relevant in the market
  4. Inflation - when there's no inflation, it keeps the prices stable over that period

Rahul Sunny answered 1 year ago
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