1960
South America
(/library/FAQs/aboutOPEC/q3.htm)
16.2 Markets With Only A Few Sellers
• Because an oligopolistic market has only a small group of sellers, the key feature of oligopoly is the tension between cooperation and self-interest. The group of oligopolists is best off cooperating and acting like a monopolist ---- producing a small quantity of output and charging a price above marginal cost. Yet because each oligopolist cares about only its own profit, there are powerful incentives at work that hinder a group of firms from maintaining the monopoly outcome.
some
Advertising and quality rivalry; administered prices
Single producer; product without close substitutes
Franchise monopolies (electricity,water); Microsoft windows; patent drugs
Chapter 16 Oligopoly
Between Monopoly and Perfect tition
• Imperfect competition refers to those market structures that fall between perfect competition and pure monopoly. • Imperfect competition includes industries in which firms have competitors but do not face so much competition that they are price taker.
Structure
Number of producers and degree of product differentiation
Part of economy where prevalent
Firm’s degree of control over price None
Methods of marketing Market exchange or auction
Joined OPEC 1969 2007 1962 1960 1960 1960 1962 1971 1961 1960 1967
Location Africa Africa Asia Middle East Middle East Middle East Africa Africa Middle East Middle East Middle East
16.1 Between Monopoly and Perfect competition
• Type of Imperfectly Competitive Markets • Oligopoly • Only a few sellers, each offering a similar or identical product to the others. • Monopolistic Competition • Many firms selling products that are similar but not identical.
Considerable
Advertising; service promotion
Country Algeria Angola Indonesia IR Iran* Iraq* Kuwait* SP Libyan AJ Nigeria Qatar Saudi Arabia* United Arab Emirates Venezuela* *founder Members
(Mankiw, Principles of Economics(2004), third edition, p347)
16.2 Markets With Only A Few Sellers
• Characteristics of an Oligopoly Market
• Few sellers offering similar or identical products • Interdependent firms • Best off cooperating and acting like a monopolist by producing a small quantity of output and charging a price above marginal cost
Many producers; Financial markets; Perfect competition Identical products agricultural markets Many producers; Retail trade (pizzas, real or Monopolistic Many beer, gas-station); competition perceived differences in personal computers products Few producers; Steel; little or no Chemicals; difference in aircraft product oligopoly Few producers; Cars; WordProducts are processing software; differentiated household appliances Monopoly