Economics regarding Oligoploy markets Essay Example | Topics and Well Written Essays - 2250 words

Economics regarding Oligoploy markets - Essay Example Perfect competition has always been considered to be best for the consumer and is favoured by nations. It is the ideal situation where all similar or identical products are available simultaneously to all buyers. This would make it impossible for both buyers and seller to influence prices. Demand and Supply will determine price at any point in time. In the real world however there is little evidence of such conditions. In the continuum between monopoly and perfect competition Oligopoly has raised its dreadful form to the detriment of the consumer. This is the situation where a few sellers, usually three or four, control the supply side and influence the customer to accept their product or service along with the price they dictate. What is not so obvious is that they also force their supply chain to accept this dictatorial attitude to get the best prices and terms. The beauty of this entire operation is that both consumers as well as the supply chain consider the oligopoly as their benefactor and willingly subscribe to their ideology. Even the state is fooled by them into the false thinking that they contribute positively to the economy by providing huge job opportunity and creating excellent platforms for increasing efficiency and quality. But the fact is that an oligopoly is exploitative although it appears to be benign; and when it hurts it is often too late to help the stakeholders. An Oligopoly is a cluster of companies that deal with similar products or services and offer them within a very narrow band of prices to the consumers. It makes a great show of perfect competition as prices and products are similar and the intensity of rivalry is perceived through their aggressive and persuasive promotional tactics. On the surface, externally, there is great fanfare of competition and competitive advantage but in reality there is great conformity amongst them. An