Understanding the Oligopoly Market -Markets in which there are sellers or producers, where the goods will be sold and are in the market. In general, competitors will carry out advertisements or promotions aimed at selling or spending their goods.
Promotions will continue to be carried out so as not to lose consumers and continue to work with the product. Of course, the price will be different from other competitors.
Are you certainly no stranger to the term market? In this review, we will explain about oligopoly market, consisting of characteristics, definitions, advantages and disadvantages along with examples. For more explanations, come on… Check out the explanation as follows.
What is Market?
Market definition it is a meeting place for sellers and buyers to carry out a transaction of buying and selling in the form of goods and services.
The market does not have a geographical limit, so the definition of a market never refers to a particular location or location. In addition, the presence of the Internet has broadened the understanding of the current market.
The market definition refers to economic activity, that is, the buying and selling of businesses, both in traditional markets and online. In this case, the market can refer to all demand activity and the supply of goods, capital, labor and values.
As for some of the features on the market are:
- There are goods or services that can be traded.
- There are requests and processes in negotiations.
- The process of sale and purchase has occurred.
- Interaction between seller and buyer.
- Transactions occur when there is an agreement between the buyer and the seller.
Understanding the Oligopoly Market
An oligopoly market is a form of imperfect competition in which the goods sold in this market are homogeneous or difficult to distinguish, despite the fact that there are several producers. This type of market, that is, will generally be dominated by more than two but not more than ten producers.
Understanding the Oligopoly Market it is a market in which many sellers or producers control a market with many buyers or consumers.
In general, a producer in a competitive oligopolistic market actively promotes or advertises, because the products sold in this market are homogeneous and can replace each other. Through promotion or advertising, producers can educate consumers about the differences between a product and other products on the market.
The intense competition between producers in oligopolistic markets has made them make various efforts to survive. Competition in this market affects the price of products sold. If a company lowers prices, other companies will do so in order not to lose customers.
Characteristics of the oligopoly market
It is very difficult to distinguish an oligopolistic competitive market from other forms of market. However, there are several types of markets that can be detected.
With reference to the above understanding, the characteristics of an oligopoly market, including:
- Generally, there are more than two producers (but less than ten) who can control this market.
- The policies of the main producer who can control the market will generally influence the policies of other producers.
- In the price of goods in this market is usually the same or there are some small differences.
- Advertising strategies and continuous innovation are required to be successful in this market.
- The types of products sold in this market are very homogeneous and can substitute each other. For example, in bath soaps of various colors, shapes and flavors.
- New vendors or producers find it very difficult to enter the market, since the old producers tend to play with prices to attract more consumers.
Advantages of the oligopoly market
- Manufacturers can adjust the price of the product according to the potential target consumers of each. Therefore, it can be said that the determination of prices depends on the policies of the producers that take into account their consumers.
Disadvantages of the oligopoly market
- It is very difficult for new producers to enter this market because the capital required is large enough to compete with other manufacturers.
For economic growth to be slow under these conditions, only a few large producers compete.
- The policies of the largest producers will have a significant impact on market conditions, including other producers.
- The capital and budget to spend on production is large enough for producers to bear, so they are often seen as a waste of economic resources.
- There are often price wars between producers, which of course translates into various changes in price conditions in the market, especially when carried out by large producers.
To achieve optimal economic development, it is not always in accordance with wishes and expectations, but surely there will be several obstacles that will arise in the future.
It is important to find solutions for each obstacle so that manufacturers can expand their business in their respective areas.
Hence the discussion this time about the Definition of an Oligopoly Market. Hopefully it can be useful for all of you.