MANAGERIAL

ECONOMICS

MONOPOLY &
OLIGOPOLY

PRESENTED BY
-MohammedDanis

h
Vikita Shah
Saurabh Kadam
Deepika Hayle
Sayali
Ayaaz Momin
Akshata Sawant
Purva Pawaskar

PRESENTED BY

MohammedDanish
Vikita Shah
Saurabh Kadam
Deepika Hayle
Sayali
Ayaaz Momin
Akshata Sawant
Purva Pawaskar

Market
Classification of market on basis of
Location
Time
Competition

Types of market

Perfect competition
Monopolistic competition
Monopoly
Oligopoly

Monopoly
A market structure in which only one
Producer
or seller exists for a Product that has no
close
substitutes

Oligopoly
According to,

In economics ,a situation in which few companies

control the major part of a particular market

Oligopoly
Oligopoly is a market form in
which a industry is dominated
by small number of sellers.
Oligopoly harms customers.
To break out of such situation,
we need to induce
competition.

A monopoly exists
barriers to entry
the large number of buyers and
sellers
the absence of barriers to entry
collusion among the dominant firms
the absence of exclusive government
franchises

Oligopoly
Why do oligopolies exist?
1) economies of scale arise because of
minimum efficient scale

Construction companies at the local level

Biotech companies
Multinational corporations
Railroad companies

Function

A monopoly is a market condition in which

only one vendor (usually a large corporation)
is in play. There may be other somewhat
similar businesses, but a monopoly exists
when only one business or individual can
provide a product or service.
In an oligopoly, the product or service may
be available from more than one vendor or
merchant, but only a few big players
dominate the market and make competition
very difficult for new entries in the field.

Examples

Examples of monopolies are difficult to produce, as

federal antitrust regulations prohibit monopolistic
market conditions in the United States. Regardless of
legal issues, though, monopolies do exist, primarily in
the utilities market. Electricity, for example, is
generally available from only one "electric company"
in any given market. Water and cable television are
equally exclusive. During the 1990s, Microsoft
commanded such a large portion of the computer
operating system environment, and demonstrated
such a propensity to absorb upstart competitors, that
it was believed to be a monopoly as well.
Examples of oligopolies are considerably more
plentiful. The automotive industry, for example, has
many competitors but is dominated by General
Motors, Ford, Chrysler, Honda, and Toyota.

Similarities

While monopolies and oligopolies are

representative of considerably different
market conditions, they do bear some
important similarities. Consumers are at a
distinct price disadvantage in both
conditions, as prices for products are
dictated by a single company in a
monopoly environment and commanded
by only a few select merchants in an
oligopoly condition. Selection is similarly
limited as products are designed and
offered by a very limited consortium in
both arrangements.

Differences

Despite their similarities, there are some distinct

differences between monopolies and oligopolies. While a
monopoly does severely restrict consumer choices,
oligopoly conditions do allow for some competition
among
the major players. This competition can even induce
price
wars, as has been demonstrated by fast-food giants,
automotive manufacturers and even cola companies.
The
most significant difference, however, is that oligopolies
are
a common market condition while monopolies are
forbidden under federal regulations.

Restrict monopoly in financial

markets, says Rangarajan (16th Oct
2009 )

The tendency of natural monopolies in the financial markets

must
be restricted. Natural monopolies are a threat," creating a
creative competitive atmosphere in the financial markets
would
spur growth.
- C Rangarajan

He also talked of establishing a relationship between

sectoral
regulator and competition. The panel discussion set the
stage for
The release of a report by CUTS titled, Competition &
Regulation in India, 2007

Features of Monopoly

One seller & large number of buyers

Monopoly is also an industry
Restriction on the entry of new firms
No close substitutes
Price maker
Price discrimination

Features of Oligopoly

Few firms
Nature of the Product
Interdependence of firm
Indeterminateness
Complex market structure
Selling cost

Types
of
monopoly
Natural Monopoly
Legal Monopoly
market
Pure Monopoly
Limited Monopoly
Public Monopoly
Private Monopoly
Simple Monopoly
Discriminating Monopoly
Bilateral monopoly
Joint Monopoly

Types of oligopoly
market
Duopoly
Oligopsony
Bilateral oligopoly
Cartel oligopoly

How do we know?

HOW TO DETERMINE THE PRICE

IN OLIGOPOLY MARKET ?
Nature of goods
Technology
Elasticity of demand
Marketing strategy
Price of inputs (Factors of production)

How far does the theory of

oligopoly match with reality ?

A Case Study

TYPES OF MONOPOLY COMPANIES

Is Microsoft a monopoly or oligopoly?

 1 year ago
Oligopoly. This is because Apple and
Linux provide operating systems in
addition to Microsoft.

Oligopoly Models

Kinked Demand Curve

Cournot (1838)
Bertrand (1883)
Nash (1950s): Game
Theory

In order to create the

demand or product In
oligopoly market
Buy 1 get 1 free offers
Lucky draw
Discount sales
Customer incentives

Characteristics of Market Structures

Monopolistic competition
Many firms producing similar but differentiated
products
Relatively free entry and exit
Each firm perceives a demand curve reflecting
the relationship between its price the quantity
demanded of its own product.
The firm can influence the price by change the
quantity it supplies or by differentiating its
product from those of its competitors.
The firms output and price are in equilibrium
when the price the firm charges is consistent with
its market share

Prof. Chamberlin
Developed the concept of
Monopolistic competition .

What do we see in the 21St

Century?
Many big corporations seeking more
market share have been following a
simple rule.
Dont build what you can buy.
WSJ, February13,2006

Part of this zeal to purchase is to fill some

of the empty production space created
in the building boon of late 90s. This
will allow for movement to capacity
production which is more efficient.

CONCLUSION