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    Pushkara ME ALA4 - 20241027 - 115336 - 0000

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    Pushkara ME ALA4 - 20241027 - 115336 - 0000

    Uploaded by

    neelchhagnani026
    2 views6 pages

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    Pushkara ME ALA4_20241027_115336_0000

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    2 views6 pages

    Pushkara ME ALA4 - 20241027 - 115336 - 0000

    Uploaded by

    neelchhagnani026

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 6

    FACULTY OF MANAGEMENT

    SUBJECT: MANAGERIAL ECONOMICS


    BBA SEM-1 ALA 4 PROS AND CONS

    TOPIC : PROS AND CONS OF


    OLIGOPOLY
    Complied by : Pushkara Ahuja

    Enrollment No : 240508030001

    Submitted to : Prof. Riya Shahi


    An oligopoly is an industry which is dominated by a
    few firms. In this market, there are a few firms which
    sell homogeneous or differentiated products. Also,
    as there are few sellers in the market, every seller
    influences the behaviour of the other firms and
    other firms influence it.

    Examples
    Some examples of oligopolistic markets in India include
    automobiles, cement, steel, and aluminum. In the global
    market, a few companies dominate mass media and
    entertainment, including The Walt Disney Company,
    ViacomCBS, and Comcast.

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    1. Economies of Scale: Large firms can benefit from economies of scale, leading to
    lower production costs. These savings can potentially be passed on to consumers in
    the form of lower prices.

    2. Innovation and Research & Development: Oligopolistic firms often have the
    resources to invest in research and development. This can lead to product
    improvements, technological advancements, and innovation within the industry.

    3. Stable Prices: Since firms in an oligopoly tend to avoid price wars, the market often
    experiences price stability. This can be beneficial for consumers who prefer
    predictability in pricing.

    4. Non-Price Competition: Oligopolistic firms may focus on factors like product quality,
    branding, and customer service rather than competing solely on price. This can result
    in a better overall consumer experience.

    5. High Profits for Investment: The higher profit margins typically found in oligopolies
    enable firms to reinvest in their operations, expand infrastructure, or explore new
    markets, potentially fostering economic growth.

    6. Barriers to Entry Protect Quality and Standards: High barriers to entry ensure that
    only firms with substantial resources and capabilities can enter the market, potentially
    maintaining high standards in terms of product quality and service.

    4
    1. Higher Prices: With limited competition, firms in an oligopoly may have the power
    to set higher prices compared to more competitive markets. This can result in higher
    costs for consumers.

    2. Reduced Consumer Choice: Since only a few firms dominate the market, the range
    of products or services available may be limited. This lack of variety can restrict
    consumer choice.

    3. Barriers to Entry: Oligopolies often have significant barriers to entry, such as high
    start-up costs or control over key resources, making it difficult for new firms to enter
    the market and challenge existing companies.

    4. . Inefficiency: Without the pressure of competition, firms in an oligopoly may not


    be as motivated to operate efficiently, leading to higher production costs and lower
    innovation.

    5. Influence on Political and Economic Power: Large firms in oligopolistic markets can
    have significant influence on regulatory policies and political decisions, potentially
    leading to regulations that favor the firms rather than consumers or the public
    interest.

    6. Price Rigidity: Prices in oligopolistic markets tend to be more stable because firms
    are hesitant to change prices out of fear of sparking a price war. This rigidity can
    prevent prices from adjusting to reflect changes in supply and demand.

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