One major pro to an oligopoly verses a monopoly is that the price usually remain stable. This is because if one company lowers their prices, others are likely to do the same. They do this in order to have a business that is competitive in industry and still have consumers that would continue to from them. However, this is not the case in a monopoly, since there is a single firm running the industry, they are able to adjust their prices as they wish because consumers will continue to buy regardless of the price due to their demands for necessary items, like gas.
In an oligopoly, there is not easy entry and exit. It is very hard to enter an oligopoly because the few companies that run it are very powerful and wealthy. This make it easy for them to crush small companies that try to enter through parallel exclusions, therefore reducing competition. These parallel exclusions were done by Ford, GM, and Chrysler when the Tucker Torpedo made a debut in 1948. In order to ensure that it would not be a threat to the Big Three's business, they were able to prevent business from selling resources Tucker would need for the cars, so he could not get the materials that were necessary to further his new invention.
Also, the major businesses in an oligopoly cannot easily exit because the firms depend on each other in order for the industry to work. Since there is a limited number of major producers, they are able to keep each other in check in terms of their pricing and products. Oligopolies do not have super efficient output on their own (compared to a competitive market), so in order to create a great enough supply for the consumer's demands, the production from each company is needed.
Although oligopolies make it difficult for other companies to enter, they are beneficial to the consumers because they keep stable prices of their product over time and have a sufficient production output for all their consumers.
Also, the major businesses in an oligopoly cannot easily exit because the firms depend on each other in order for the industry to work. Since there is a limited number of major producers, they are able to keep each other in check in terms of their pricing and products. Oligopolies do not have super efficient output on their own (compared to a competitive market), so in order to create a great enough supply for the consumer's demands, the production from each company is needed.
Although oligopolies make it difficult for other companies to enter, they are beneficial to the consumers because they keep stable prices of their product over time and have a sufficient production output for all their consumers.
One thing that is special about oligopoly compared to other market models is how the idea of price control functions within industries that are oligopolistic. Like you said, Katherine, if one firm lowers their price in an oligopoly, other firms most follow. However, one must also consider the possibility of collusion within oligopolies. As there are such few firms, if they are selling a product that is vital to the everyday life of a consumer, then each firm can agree to raise their price, thus increasing the profits of each firm. This helps these firms but hurts the consumer, and for this reason, collusion between firms is a controversial topic and we often see lawsuits regarding it.
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