Market Structure Oligopoly

It is a form of the market in which there are a few big sellers of a commodity and a large number of buyers. Each seller has a significant share of the market.

There is a high degree of interdependence among the sellers regarding their price and output policy.

When the number of sellers of a product is two to ten, it is a situation of oligopoly market.

For example goods like automobolies, electronic products and many of the consumer products like baby foods, vegetables oils, soft drinks, etc.

There are only a few auto-producer in the Indian market. Maruti, Tata, Fiat, Ford and GM are well known brand names.

Features of Oligopoly

1) Few Firms :

A few firms, but large in size, dominate the market for a commodity.

Each firm commands a significant share of the market, it can impact market price of  the product.

Market Structure Monopolistic Competition

Both Monopoly and Perfect Competition market structure are rarely found in actual practice.

In the real world it is imperfect competition which dominates the market structure.

The main form of imperfect competition is Monopolistic Competition.

It is a form of market in which there are many sellers of the product, but the product of each seller is somewhat different from that of the other.

Thus, there are many sellers, selling a differentiated product.

For example: firms producing different brands of toothpastes like Colgate, Pepsodent, close –up etc.

Monopolistic Competition combines the features of monopoly and perfect competition.

Trademark gives monopoly power to the firms also since many firms are producing a commodity (like toothpaste) there is a competition in the market.

In view of the blending  of monopoly and competitive elements, this type of market has a Partial Control over price of their product.

It is only through product differentiation that a monopolistic competitive firm enjoys partial control over price.

Difference in design, colour or even packing of the product attracts buyers to buy a particular product even at a relatively higher price.

But full control over price is ruled out because

a) there are competitors in the market, and

b) there is a large number of close substitutes