Question

There are many economists who have been analyzing various industries as they move from a monopolistic competitive to more of an oligopolistic. Their justification is that government and new policies are making ‘competition’ more and more difficult. Do you agree? Disagree?

Answer 1

If more and more markets are moving from Monopolistic competition to Oligopolist that means instead of a large number of small firms serving the market are replaced by few large number of firms serving the market. This can be a case of acquisition and merger of existing firms in Monopolistic competition, Increased scale in the production of few firms which grew large over time. The government can't stop any of those, nither acquisitions nor increased return to scale. New government policies can prevent collision between the oligopoly firms and that will also ensure a fair competition in the market.

I disagree with the economists who are saying that due to new government policy competition is getting more difficult. A monopolistic market will turn into an oligopoly with time and few firms earn more profit than other will acquire other loss-making firms and increase in size.