Topic > Oligopoly: market structure, types and characteristics

Market structures refer to the number of companies in the market that produce identical goods and services. The market structure strongly influences the supply of different raw materials on the market and consequently the behavior of companies in the sector. Pricing decisions and strategies are crucial aspects when dealing with market structures as every economic activity in the market is measured by price (Bar-Gill, 2012). Before making a final decision on the price to be set, the interested parties, who are mainly the managers, must critically analyze each market need, existing conditions and emerging developments. The various market structures and related pricing strategies can be discussed as follows: PERFECT COMPETITION In oligopolistic markets, there is a conflict between cooperation and self-interest. If all firms set low output targets, the price will be high, but if the firm produces excess output the prices will be low and this will lead to low profits. Therefore firms have an incentive to expand their revenues through regulation of production. The oligopoly market structure has a number of characteristics. One, if the characteristics of oligopoly are interdependence, since there are few sellers in the market, when a company advertises its products in a way that is unique and so attractive in the eyes of customers, it will automatically take the share of largest market. Another feature of is advertising. In oligopoly a change in company policy has an immediate effect on other firms in the industry. Therefore, competing companies remain vigilant about the company's management which in turn considers a change in company policies. Therefore, advertising is one way for an oligopoly to avoid being priced out of the market. An oligopolistic firm may design the best advertising campaign with the intention of acquiring the largest market share (Prasad, 2007). Other companies in the industry will automatically resist his defensive advertising. In oligopoly, an important characteristic is the behavior of the group. There may be a limited number of companies, but a company's actions affect the monopoly that comes from the word mono meaning single. There are three forms of monopoly: pure monopoly in which the industry is the firm itself, effective monopoly in which a firm has less than twenty-five percent of the total market share, and finally natural monopoly in which high fixed costs are already defined for the natural market. resources such as gas, electricity, water, telecommunications and railways. There are no firms with close substitutes for raw materials produced in a monopolistic market structure. The individual producer can be an individual who owns the production of a particular good or a partnership or joint-stock company (Metro, 2013). In other words, it is difficult to distinguish between a company and an industry. The monopolistic structure of the market gives the owner total control over the supply of products and services. Since a firm has full control over the supply of the good it offers to the market, it has the power to determine its price. Therefore, as a sole supplier, the monopolist may have a crown that may not be visible. Even in a monopolistic market structure, the cross elasticity of demand between the monopolist's product and any other supplier's product should be very low. The individual supplier may not influence or be influenced by the prices of other economies offered in the economy. Under a pure monopoly where there is only one owner