/ / Oligopoly - what kind of structure is this?

Oligopoly - what kind of structure is this?

Nowadays, find the country in which you runAll conditions of pure competition are quite difficult. Virtually every market is dominated by one or several monopolists, which have a decisive influence on its further development, and if not for the constant control of the government, the current businessmen would have far less opportunities to do business. One of the most common forms of imperfect competition today is oligopoly. This concept for many still remains vague, and therefore let's look at it in more detail.

oligopoly is

Definition of term

Oligopoly is such a market form.imperfect competition, in which in a certain market there is a very small group of sellers. At the same time, an increase in their number at the expense of newbies is either impossible or extremely difficult. In other words, oligopoly is when sellers can be counted on the fingers.

Signs and types

There are the following features of this market structure:

  • Standardized or differentiated products.
  • A large number of buyers and a small number of firms.
  • The presence of strong protective barriers to entry into the market of possible competitors.
  • The interdependence of firms from each other, which somewhat limits the control of prices.
    oligopoly examples

There is another definition of this typecompetition, closely related to the value of the Herfindahl index. This is the indicator with which it is possible to quantify the degree of market monopolization. It is calculated by the formula:

HHI = S12 + C22 + ... + CMr.2, where

S - the percentage of sales of each of the firms.

Its maximum value is 10,000 (netmonopoly), and the minimum value is limited by the ratio of 10,000 / n, where n is the number of companies in the industry (provided that the sales shares of these firms are equal). It is believed that oligopoly is a market for which the value of this index exceeds 2000. Since 1982, this index has played a huge role in antitrust legislation: if the coefficient in an industry exceeds 1000, the state begins to control any mergers and acquisitions of firms. Depending on what type of product is produced on the market, it is customary to distinguish the following types of oligopoly: pure and differentiated. In the first case, a homogeneous standardized product (for example, cement, aluminum, copper) is produced, and in the second, various products of the same functional purpose (for example, cars, cameras, tires).

oligopoly types
Картель – тоже олигополия.This is a deal between a small number of companies regarding output and prices in order to increase profits. If it combines all the companies of the industry, then in this case it behaves like a monopolist.

Oligopoly: life examples

Some people are perplexed:“Why are there such expensive loans in Russia?” Bankers are justified by the high level of risk and the high cost of raising funds. But in reality, this is just a screen behind which a higher (by comparison with European indicators) margin is hidden. Half of the entire banking system is controlled by six banks: Bank of Moscow, VTB 24, Rosselkhozbank, Gazprombank, Sberbank and VTB. There is a classic case of oligopoly, and even under the wing of the state. Other examples include the passenger aircraft market (Airbus, Boeing), the automobile market, major household appliances, etc.