Oligopoly Explained

1. Harmeet Anand, Hiroki Osame, Hiroko
Taniguchi, and Keita Kim
The Concept of an
Oligopoly

2. THE NATURE OF OLIGOPOLY
"A market form where there are only a few firms in the industry
but there are many buyers."
- Producers
- Buyers
- Products
- Mutual Interdependence
- Price
- Competition
- Relationship between firms
- Economic Scale

3. GRAPHS

4. KINKED DEMAND CURVE
•Increase price = elastic
•Decrease price = inelastic

5. MARGINAL REVENUE CURVE
•Two different elasticities
•Disappears

6. MARGINAL COSTS CURVES
•When vertical, change in marginal costs will not affect the
price and quantity

7. NORMAL PROFIT

8. ABNORMAL PROFIT

9. LOSS

10. COMMON EXAMPLES
-Operating Systems : Apple, Microsoft
-Gaming Consoles : Nintendo, Sony, Microsoft
-Canada's wireless service : Rogers Wireless, Bell Mobility, Telus
-UK's supermarkets : Tesco, Sainsbury's, Asda and Morrisons
-World wide food processing : Kraft Foods, PepsiCo and Nestle
-Airliners : Boeing and Airbus
-American TV : Disney/ABC, CBS Corporation, NBC Universal, Time Warner,
and News Corporation
-UK's detergent market : Unilever and Procter & Gamble

11. COMPARISON
Oligopoly Monopoly Perfect CompetitionMonopolistic Competition
-
Innovative/ creative
- Few firms =
greater efficiency
- Expand too much
- Experience
diseconomy of scale
- Increase in AC
- No competition, no
innovation
- Undifferentiated
products
- Consumers have
limited choice
- BORING
- Advertise and induce
consumers to spend more
-No control in price
- Consumers suffer more

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13. OLIGOPOLY
A market form where there are only a few firms in the industry
but there are many buyers.

The kinked demand curve very clearly depicts the nature of an
oligopolistic market structure