Question

Which of the following markets are oligopolistic?

• passenger airlines
• cereal
• fast food
• wheat
• golf equipment
• the college bookstore on your campus

What happens to pricing and service in oligopolistic environments? Please use an example and include a resource.

Answer 1

Answer-1. Correct option is 'A'

Passenger airlines markets are oligopolistic. The domestic aviation market in the united states is a classic example of an oligopoly. Oligopoly is characterized as a situation in which a few firms have a vast majority of market share.

Answer-2. Oligopoly firms set prices to maximize their own profit. If one firm in the market lower its price on goods and services, attaining optimal sales growth, firms in direct competiton usually follow suit, often creating a price war. Price war are often short lived and intense periods when competing businesses lower their prices in a bid to win extra market share, generate improved cash-flows and perhaps increase total revenue. Example- A price war is in the low cost airline market caused in part by over-capacity on some route.