OPEC CARTEL
“OPEC
As a CARTEL”
There are two kinds of extreme market structure and they are perfect competition and imperfect competition. In a perfectly competitive market there are many numbers of sellers and many numbers of buyers selling and buying homogeneous products, therefore there is very little impact of a single buyer or seller changing the price of his/her product. In an imperfect competitive market there are few sellers and these sellers have some control over the prices and output of the product. Here, in this kind of market the whole market is affected by an individual changing his/her product price. In USA most of the industries fall between these two extreme market structures. But in this essay we’ll talk about oligopoly. It is imperfect competitive market state therefore here there are few no. of sellers.
Oligopoly covers many kinds of industrial behaviours and structures because of its broad nature. Oligopoly is a market condition where few numbers of sellers (oligopolists) come together and form a market or an industry. An oligopoly may have 2 firms or 20 firms, selling and producing differentiated or undifferentiated products and services. There are few participants in this market structure therefore each participant is aware about the activities of other participants. The decisions are influenced by one another. As this market is operated by few firms, the price of the product and the quantity of production is fixed by the firms itself keeping in mind their self-interest and self-respect. Sellers (oligopolists) are acting and cooperating like a monopolist – producing a small amount of quantity of goods and selling these goods at a price higher than the marginal cost. These are some of the powerful incentives at work which hinder a group of firms from maintaining the monopoly outcome.
An oligopoly is operated under imperfect competition; they follow a kinked demand curve which shows that inelasticity below the market price and
As a CARTEL”
There are two kinds of extreme market structure and they are perfect competition and imperfect competition. In a perfectly competitive market there are many numbers of sellers and many numbers of buyers selling and buying homogeneous products, therefore there is very little impact of a single buyer or seller changing the price of his/her product. In an imperfect competitive market there are few sellers and these sellers have some control over the prices and output of the product. Here, in this kind of market the whole market is affected by an individual changing his/her product price. In USA most of the industries fall between these two extreme market structures. But in this essay we’ll talk about oligopoly. It is imperfect competitive market state therefore here there are few no. of sellers.
Oligopoly covers many kinds of industrial behaviours and structures because of its broad nature. Oligopoly is a market condition where few numbers of sellers (oligopolists) come together and form a market or an industry. An oligopoly may have 2 firms or 20 firms, selling and producing differentiated or undifferentiated products and services. There are few participants in this market structure therefore each participant is aware about the activities of other participants. The decisions are influenced by one another. As this market is operated by few firms, the price of the product and the quantity of production is fixed by the firms itself keeping in mind their self-interest and self-respect. Sellers (oligopolists) are acting and cooperating like a monopolist – producing a small amount of quantity of goods and selling these goods at a price higher than the marginal cost. These are some of the powerful incentives at work which hinder a group of firms from maintaining the monopoly outcome.
An oligopoly is operated under imperfect competition; they follow a kinked demand curve which shows that inelasticity below the market price and