Question

please find me an example of oligopolistic market ,and make an analysis about in what ways it is oligopolistoc and what harms and good it does to an economy and a social welfare as a whole

Answer 1

The most suitable market which can be tagged as an oligopoly market is the car industry.

Reasons for being oligopolistic market-

• Huge level of investment which creates a barrier for new firms to enter in the market.
• A few sellers in the market.
• Cut throat competition.

Adverse impact on the economy as well as society-

• It influence the price and the industry has the control over the price.
• If the industry is able to establish the cartel then it would be very harmful for the consumers, in 1970 when OPEC practices the cartel then many economy experienced inflation and as well as unemployment.

Positive impact on society and economy -

• If there is cut throat competition among the firms then the consumer surplus would be maximum.
• Consumers would get the highest quality product at minimum possible price.