Pepsi as an Oligopoly Market Product
1.1 Introduction
Market is a particular products and services to be exchanged between a significant group of buyer and sellers for a price for market benefit.
There are mainly two types of market. 1. Perfect or Pure Competition Market
2. Imperfect Competition Market a) Monopoly Market b) Oligopoly Market c) Monopolistic market d) Duopoly market e) Monopsony Market
Among those markets we have chosen oligopoly market for our report.
An oligopoly the domination of a market by a few firms & a duopoly is a simple form of oligopoly in which only two firms dominate a market.
Where an oligopoly exists, a few large suppliers dominate the market resulting in a high degree of market concentration; a large percentage of the market is taken by the few leading firms.
An oligopoly usual depends on high barriers to entry. It often leads to a lack of price competition (although there may be fierce competition in terms of marketing etc) which is the problem from the point of view of consumers.
Because an oligopoly consists of a few firms, they are usually very much aware of each others' actions (e.g. changes to prices). This can lead to informal collusion as firms match prices to avoid provoking a price war. This has a similar effect to deliberate collusion, but is harder for regulators to control.
This also means that when price cuts do occur, the market tends to have to follow the lead of any one firm.
This leads to each firm experiencing a peculiar demand curve, the so-called kinked demand curve. An oligopolist faces a downward sloping demand curve but its price elasticity may depend on the reaction of rivals to changes in price and output. Assuming that firms are attempting to maintain a high level of profits and their market shares.
• Competitors will not follow a price increase by one firm, so a firm that raises prices will lose market share and therefore profits.
• Competitors have to match a price cut by one firm to avoid a loss of market share. That means that
Market is a particular products and services to be exchanged between a significant group of buyer and sellers for a price for market benefit.
There are mainly two types of market. 1. Perfect or Pure Competition Market
2. Imperfect Competition Market a) Monopoly Market b) Oligopoly Market c) Monopolistic market d) Duopoly market e) Monopsony Market
Among those markets we have chosen oligopoly market for our report.
An oligopoly the domination of a market by a few firms & a duopoly is a simple form of oligopoly in which only two firms dominate a market.
Where an oligopoly exists, a few large suppliers dominate the market resulting in a high degree of market concentration; a large percentage of the market is taken by the few leading firms.
An oligopoly usual depends on high barriers to entry. It often leads to a lack of price competition (although there may be fierce competition in terms of marketing etc) which is the problem from the point of view of consumers.
Because an oligopoly consists of a few firms, they are usually very much aware of each others' actions (e.g. changes to prices). This can lead to informal collusion as firms match prices to avoid provoking a price war. This has a similar effect to deliberate collusion, but is harder for regulators to control.
This also means that when price cuts do occur, the market tends to have to follow the lead of any one firm.
This leads to each firm experiencing a peculiar demand curve, the so-called kinked demand curve. An oligopolist faces a downward sloping demand curve but its price elasticity may depend on the reaction of rivals to changes in price and output. Assuming that firms are attempting to maintain a high level of profits and their market shares.
• Competitors will not follow a price increase by one firm, so a firm that raises prices will lose market share and therefore profits.
• Competitors have to match a price cut by one firm to avoid a loss of market share. That means that