MANAGERIAL ECONOMICS

Managerial Economics

[Name of the Institute]

Managerial Economics

Introduction

In terms of competition, the business market and the structure of the market can easily be differentiated. The characteristics of the market allow differentiating among the markets, and analyzing the competitive players existing in the market. It is the requirement of the business market that all the existing players follow the rules and policies, so that they can make their position in the business market and environment (Pakes, 2000, pp. 207-236). An oligopolistic market is a type of market, which is dominated by a few large players, and the degree of concentration of the market is very high. The leading firms of the industry and market have high control over the smaller firms. The level of competition among the few players is high, where the existing companies compete to maintain their position in the market. The oligopolistic market differs from other forms of market on the basis of characteristics and structure, and the players existing in such a market follows the same characteristics (Matsumura, and Matsushima, 2012, pp. 22-31).

Oligopolistic market provides different incentives to the collusive behavior and it is necessary that all such incentives are known. The oligopolistic market allows the firms to set prices, change the outputs, lower the prices, increase the prices, offer new services, expand in the market, and advertise according to their own will (Sklivas, 1987, pp. 452-485). The competitors in the oligopolistic market are interdependent on each other, and have to take decisions keeping in mind all the existing players in the market. The oligopolistic market includes both collusive and non-collusive organizations differentiated on the basis of their characteristics and products. There are different models which help in understanding the characteristics of oligopolistic market and of the players existing in that market (http://www.preservearticles.com/201106178093/6-essential-characteristic-features-of-oligopolistic-market.html).

Discussion

Characteristics of Oligopolistic Market

An oligopolistic market has a few competitive organizations providing its services products to customers and other organizations. The oligopolistic market can be differentiated from other types of market on the basis of its prominent characteristics (Bolotova, Connor, and Miller, 2005). These characteristics allow in understanding the oligopolistic market in a better way, as it shows that how all the industries existing in the market behave and react in different cases and situations. Some of the main characteristics of oligopolistic market are elaborated below:

In an oligopolistic market, the barriers to new entry are very high, and the market does not really welcome new players and new competition. This is because the level of competition is already very high, and the existing firms set the standards so high that new entries can't easily enter the market. When the barriers to entry are high, the customers have no choice and they have to stick to the products being offered by the already existing firms. The new entrants will have a very small market share, and they will have to set their price too high, this result in fewer customers and companies have to face loss because of it.

The players in the oligopolistic market are well-known ...