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Economics For Managers - Session 14

Economics For Managers - Session 14

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Published by Abimanyu NN
ECONOMICS FOR MANAGERS
ECONOMICS FOR MANAGERS

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Categories:Types, Business/Law
Published by: Abimanyu NN on Oct 18, 2011
Copyright:Attribution Non-commercial

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06/23/2013

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PSG INSTITUTE OF MANAGEMENTMBA 2011-13 BATCHI Trimester
Session XIV- For Batch C and DMarkets and Competition- Oligopoly
ECONOMICS FOR MANAGERS
 
Oligopoly
We now move away from the fairly straightforward world of perfect competition and monopoly into the complex and uncertain world of oligopoly .We find that many market structures tend towards being an oligopoly as time progresses. They are frequently fascinating markets to look at! 
An oligopoly is a market dominated by a fewproducers, each of which has control over themarket. It is an industry where there is a high level ofmarket concentration. However, oligopoly is bestdefined by the conduct (or behaviour) of firms withina market rather than its market structure.
The concentration ratio measures the extent to whicha market or industry is dominated by a few leadingfirms. Normally an oligopoly exists when the top fivefirms in the market account for more than 60% oftotal market demand/sales.
26/09/112EFM Faculty P.Uday Shankar
 
Oligopoly- Characteristics
26/09/11EFM Faculty P.Uday Shankar3
1.
Afew large dominant firms, with manysmall ones,
2.
Aproduct either standardized ordifferentiated,
3.
Power of dominant firms over price, but fearof retaliation,
4.
Technological or economic barrierstobecome a dominant firm,
5.
Extensive use ofnon-price competitionbecause of the fear of price wars.

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