Market Structures 3: Oligopolies

The characteristics, behaviour and transport relevance of oligopolistic markets 

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  • Created by: TessAni
  • Created on: 19-01-13 11:15
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  • Oligopolies
    • Characteristics
      • High concentration ratio
      • Price Rigidity - risks + uncertainties
      • Profit maximisation may not be firms objectives
      • Interdependence
      • non-price competition in order to gain market share
      • High Barriers to Entry
      • Kinked Demand
    • Behaviour
      • Theory of Kinked Demand
      • Game Theory
        • Decisions are made based on assumptions as to how other firms will react
      • Price makers /risks because of competitors
        • Therefore prefer non-price competition
          • Branding, customer service, location, range of products
      • Remember Kinked Demand is the theory not the reality
      • Collusion  -tacitly or otherwise
    • Transport Relevance
      • Generally most real-life market structure
      • Ferry Companies
      • Bus Market post deregulation
      • Rail companies - with recent govt. policy reducing number of firms
      • Scheduled airlines - through alliances


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