Texts:
Definition of oligopoly: Oligopoly is a market structure characterized by a small number of large firms dominating the market. These firms have significant market power and often engage in strategic behavior to maximize their profits.
Features of the market structure selected:
1. Seller entry/exit barriers: Oligopolistic markets typically have high barriers to entry, making it difficult for new firms to enter the market. Existing firms may also face barriers to exit due to high sunk costs.
2. Degree of product homogeneity or differentiation: Oligopolistic markets can have both homogeneous and differentiated products. Some firms may offer identical products, while others may differentiate their products through branding, quality, or other factors.
3. Number of companies in the market: Oligopolistic markets have a small number of firms, usually ranging from two to ten.
4. Number of customers: Oligopolistic markets can have a large number of customers, depending on the industry and market size.
5. Product prices: Oligopolistic firms often engage in price competition or non-price competition strategies to gain a competitive advantage.
Explanation of what happens to the supply-demand curve and equilibrium as price and quantity shifts: In an oligopolistic market, when there is a shift in price or quantity, it can have significant effects on the supply-demand curve and equilibrium. If one firm increases its price, other firms may choose to follow suit to maintain their market share. This can lead to a shift in the supply curve, resulting in a higher equilibrium price and lower equilibrium quantity. Conversely, if one firm decreases its price, others may also lower their prices, leading to a shift in the demand curve and a lower equilibrium price and higher equilibrium quantity.
Identification and justification of an example of a company that exists in the selected market structure: One example of a company that exists in an oligopolistic market structure is the automobile industry. In this industry, a small number of large firms, such as Toyota, General Motors, and Volkswagen, dominate the market. These firms have significant market power and engage in strategic behavior, such as pricing decisions and product differentiation, to gain a competitive advantage.
Conclusion: Oligopoly is a market structure characterized by a small number of large firms with significant market power. It has features such as high entry/exit barriers, both homogeneous and differentiated products, a small number of companies, and intense competition. Understanding the dynamics of oligopolistic markets is crucial for analyzing the behavior of firms and the overall market outcomes.
References: (Please provide the appropriate references here)