Question

Give an example each of an oligopolistic and a monopolistically competitive market. Compare the barriers to entry in these two markets. Why do regulatory authorities monitor oligopolies more aggressively than monopolistically competitive markets?

Answer 1

Oligopoly and Monopoly market is an imperfect market structure. Monopoly market is situation existence of single seller and there is no close substitute for goods.Another hand oligopoly market situation where the existence of any firms which producing depreciate product and significance barrier to entry to other firms.

The barrier to entry in monopoly market due to technological progress, legal barrier, availability of the natural resource.

The barrier to entry in the oligoply market due to economies of scale enjoyed by the firms.In other words, the firm can produce larger output with minimum cost.

The problem of the oligopoly market is the formation of the collision in and control over the supply of goods and price hence government will try to regulate them.