ECO 204 Week 3 Assignment Oligopolies
ECO 204 Week 3 Assignment Oligopolies
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Date Created: 11/06/15
Oligopolies 1 O LIGOPOLIES PRINCIPLE OF MICROECONOMICS ECO204 YOUR NAME D ECEMBER 21, 2010 Oligopolies 2 Are Oligopolies always bad for society? I would disagree that oligopolies are always bad for society because with oligopolies there is really no price competition. Oligopolies are defined as “a form of industry structure characterized by a few dominates firms. Products may be homogenous or differentiated.” (Case, Fair & Oster, pg. 283) In the chapter reading there were very good examples on how oligopolies effect society; while at times the prices may be slightly higher than the cost to produce the item all companies that are producing the item will be within the same price range. One may ask how a company will make money if the entire product falls in the same price bracket. In oligopolies companies are always in competition for newer technology and keeping up with the latest demands from its consumer, this is what allows a company that’s in an oligopoly stand out above the rest. When it comes to items such as televisions, we have different brands of televisions which are produced by different companies but each company is able to make a profit because as a consumer we will tend to buy a product which we have always used such as Sony or JVC and if the product brand that we normally purchase does not have the qualities that we are looking for than we will look at another reliable brand that has those qualities around the price that we are looking to pay. When a company merges with another company in the beginning it can be rough on a consumer due to price and production because the company which took the merge has put in an Oligopolies 3 investment which they are trying to achieve the return from that investment therefore I do not feel as if oligopolies are always bad for society. Beer companies have few large firms and many small firms which still consider an oligopoly but one problem that many companies such as the beer companies which are set up as such run into are the level of productivity compared to the smaller firms. Larger companies tend to be more competitive which will lead them to producing product faster and under the needs of its consumer. In the beer company there is a lot of competition among the smaller and larger companies because while the larger companies are able to produce a quality product the price tends to be a little more expensive, where a smaller company is able to produce a product near the same quality but at a lower rate which will cause customers to purchase more of their product. There are many companies which operate under oligopolies and all of these companies are able to make a profit but the determination of the amount of profit which the company makes depends on the consumer and what the consumer likes, needs and what brand the consumer may be loyal to. Oligopolies 4 References: Case, K. E., Fair, R. C., & Oster, S. M.,(2009), Principle of microeconomics. New Jersey: Pearson Education, Inc., Oligopolies 5
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