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Oligopoly market is a market model between complete monopoly and monopolistic competition, which refers to a market in which most of a certain product is controlled by a few large enterprises. Each large enterprise occupies a considerable share in the corresponding market and has a decisive influence on the market.
Such as steel, automobiles in the United States, household appliances in Japan and other large industries. Under this market condition, the commodity market price is not determined by market supply and demand, but is formed by several large enterprises through agreement or tacit understanding. After the formation of this alliance price, it will generally not change for a long time.
This is because a manufacturer's individual price reduction will lead to the retaliatory behavior of competitive enterprises competing to reduce prices. The result can only be that both sides lose, and everyone reduces their income; If the price is raised, it means that the market share will decrease, and the loss will outweigh the gain.
1. Few manufacturers. There are only a few manufacturers in the market (when there are two manufacturers, it is called duopoly), and each manufacturer plays an important role in the market and has a considerable impact on the price of its products.
2. Interdependence. Any manufacturer must consider the reaction of competitors when making decisions, so it is neither a price maker nor a price receiver, but a price seeker.
3. The product is homogeneous or heterogeneous. Products are indistinguishable and highly interdependent. Known as a pure oligarch, it exists in industries such as steel, nylon and cement. Different products and low interdependence are called different oligarchs, which exist in automobile, heavy machinery, petroleum products, electrical appliances, cigarettes and other industries.
4. It's not easy to get in and out. It is quite difficult, even extremely difficult, for other manufacturers to enter. Because it is not only in terms of scale, capital, reputation, market, raw materials, patents, etc. It is difficult for other manufacturers to compete with the original manufacturers, and because the original manufacturers are interdependent and closely linked, it is difficult for other manufacturers not only to enter but also to quit.
The oligopoly market structure is similar to monopoly competition, which contains both monopoly factors and competition factors. But relatively speaking, it is closer to the monopoly market structure, because a few enterprises occupy a large share of the market, which makes these enterprises have quite strong monopoly power. The products of oligopolistic enterprises can be homogeneous or different. The former is sometimes called pure oligopoly, while the latter is called differentiated oligopoly.