José Luís Malaquias
Senior Member
Unless you want to question the Britannica Encyclopaedia definition, here's what an oligopoly is:
market situation in which each of a few producers affects but does not control the market. Each producer must consider the effect of a price change on the actions of the other producers. A cut in price by one may lead to an equal reduction by the others, with the result that each firm will retain approximately the same share of the market as before but at a lower profit margin. Competition in oligopolistic industries tends, therefore, to manifest itself in nonprice forms such as advertising and product differentiation. Characteristic oligopolies in the U.S. are the steel, aluminum, and automobile industries.
You may argue that they didn't include the photograhic industry, but I don't think that is a big stretch of imagination (few producers who affect but do not control the market, ring a bell?).
In case what they say is too dense for you (which I doubt, since you strike me as a very smart person), what they are saying is that in an oligopoly (which is not a cartel, the latter being an ilegal practice, the former being a common trend) the competitors have the perception that if they compete on price all they will get is the same market share with less profits, and so they are intelligent players, and have an understanding (a gentleman's agreement, if you will) that they will not compete over price, because that's bad for them all, and instead they differentiate their products to keep neck to neck competition to a minimum.
You will forgive me, but that's what we have here.
Which is fine with me. Just don't tell me that this is a free market. It is an oligopoly and you can't move me one inch out of it, and unless you think Britannica is also off, you should probably at least concede me that.
market situation in which each of a few producers affects but does not control the market. Each producer must consider the effect of a price change on the actions of the other producers. A cut in price by one may lead to an equal reduction by the others, with the result that each firm will retain approximately the same share of the market as before but at a lower profit margin. Competition in oligopolistic industries tends, therefore, to manifest itself in nonprice forms such as advertising and product differentiation. Characteristic oligopolies in the U.S. are the steel, aluminum, and automobile industries.
You may argue that they didn't include the photograhic industry, but I don't think that is a big stretch of imagination (few producers who affect but do not control the market, ring a bell?).
In case what they say is too dense for you (which I doubt, since you strike me as a very smart person), what they are saying is that in an oligopoly (which is not a cartel, the latter being an ilegal practice, the former being a common trend) the competitors have the perception that if they compete on price all they will get is the same market share with less profits, and so they are intelligent players, and have an understanding (a gentleman's agreement, if you will) that they will not compete over price, because that's bad for them all, and instead they differentiate their products to keep neck to neck competition to a minimum.
You will forgive me, but that's what we have here.
Which is fine with me. Just don't tell me that this is a free market. It is an oligopoly and you can't move me one inch out of it, and unless you think Britannica is also off, you should probably at least concede me that.