Are Oligopolies Good for British Consumers?

An oligopolistic market is one that has several dominant firms with the power to influence the market they are in; an example of this could be the supermarket industry which is dominated by several firms such as Tesco, Sainsbury’s, and Waitrose etc... Furthermore an oligopolistic market can be defined in terms of its structure and its conduct, which involve various different aspects of economics.

The definition of an oligopoly is the market condition in which the production of identical or similar products is done by a small number of big firms. Oligopolies can be categorized in to two types: homogenous oligopolies where the product is exactly the same (e.g.: steel production)

Many utilities are monopolies by having the entire market share in certain areas. With deregulation of these utilities, the market becomes open to competition for market share to begin. In terms of regulation of monopoly, the government attempts to prevent operations that are against the public interest, call anti-competitive practices. Likewise, oligopoly is a market condition where there are minimal distributors that have a major influence on prices and other market factors. This causes market failure, especially if evidence of collusive behavior by dominant businesses is found.

A monopoly is distinguished from a monopsony, in which there is only one buyer of a product or service; a monopoly may also have monopsony control of a sector of a market. Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monopsonies and oligopolies are all situations such that one or a few of the entities have market power and therefore interact with their customers (monopoly), suppliers (monopsony) and

The big six energy firms effectively have an oligopoly on the UK energy market despite the existence of some smaller firms who are mainly involve in the retail aspect of the market (extract A). The market concentration of these firms and the

Oligopolies are a type of market structure evident in Australia, which is comprised of 2 or more firms having a significant share of the market. In an oligopoly the few firms sell similar but differentiated or homogenous products and is characterised by a large number of buyers making it a form of imperfect competition. This market structure is evident through the Big Four Banks, Phone Industry - Vodafone, Optus and Telstra.

Oligopolies have been around ever since there is trade. However, it has only recently gained grounds in this age of globalisation. Never before has oligopolistic competition been so fiercely contested across so many industries.

A small collection of large companies produces the majority of goods, giving consumers the ability to choose the best of the worst. This allows the corporations belonging to the oligopoly to collaborate on price, both at a consumer and employee level, protecting their profit margins by continually oppressing the consumers and workers into either accepting the offered price, or receiving nothing.

5. In the case of oligopolistic markets, self-interest makes cooperation difficult and it often leads to an undesirable outcome for the firms that are involved.

Oligopoly refers to the market situation that would lie between pure competition and monopoly. It is characterized by small group of firms that control the market for a certain product or service. This gives these businesses huge influence over price and other aspects of the market.

An oligopoly is a section of the market in which only a handful of firms dominate the majority of the market share. Examples of this would be Coles and

An Oligopoly is similar to a monopoly in that there is restricted competition due to barriers to entry, but unlike monopoly there is competition. In Oligopolies there are just a few, very large firms, competing with similar or identical products.[3] Examples of oligopolies are oil companies and automobile manufactures. Unlike monopolies these firms have to take into account what the other firms will do and either adjust their prices in order to gain advantage over one another or collude with one another in order to become a monopoly (Oligopoly market Structure, 2007-2012). The latter being what most individuals fear when they think of monopoly; not allowing the market demand to set the price of goods coming to market, but instead limiting the supply in order to drive up the price of a product. The United States anti-trust laws are designed to limit firms’ ability to do this, but due to the amount of time it takes to prove such actions their effectiveness is limited. In the case of oligopolies the barriers to entry are what prevent firms from competing, and firms instead produce as much capacity as their infrastructure allows and set the price to clear the market. The more firms that compete, the more likely the aggregate welfare of the economy is to be satisfied, and the less likely that one firm can affect the whole industry.

An oligopoly is defined by Keat and Young (2009) as, “A market in which there is a small number of relatively large sellers.” The auto industry is considered to be to an oligopoly because there are a large number of sellers, thus leaving the consumer only a certain number of companies from which to purchase an automobile. The major manufacturers include Ford, Chrysler, General Motors (GM), Toyota, and Renault/Nissan.

With limited options the oligopoly tends to largely ignore the actual consumer because they have such little market power so, consumer orientation is low in an oligopoly and the investment in market research tends to be low to non- surviving. As a result of all this, oligopolistic markets have highly loyal customers due high brand awareness but very low in brand associations and exhibits low differentiation from each other. In Australia 80 percent of national retail banking is ruled by four big banks i.e. National Australia bank (NAB), Common Wealth Bank, Australia

Within the market, it is claimed that there is tacit collusion between organizations to maintain the status quo. These incumbents, once the oligopoly has settled down into an equilibrium position, are able to enjoy a quiet life and split the profits between them. Additionally, there may be a general lack of interest on the part of organizations to compete in their markets unless actions are undertaken by others to upset the current situation.