Oligopoly Within The Modern Market Place

Within the economic world we hear about corporations that have a monopoly over certain industries and they solely control the market on specific products. According to Kramer, “Oligopolies are prevalent throughout the world and appear to be increasing ever so rapidly” (Kramer,2019). They will also have the ability to set the price on the product that they are producing because they control a majority of the product in the market. But in an oligopoly, there can be a selected number of corporations that controls a certain industry. The corporations that fall into this category are still competitors against one another, but they also work together to help their corporations excel. This will more than likely cause the prices for their specific product, or services to increase and the consumer will have to pay at these higher costs.

The reason oligopoly even exists within our economies is because of seven reasons. The first reason is because of the large amount of capital investment that is needed to enter the industry. And the new corporation might be a little apprehensive to enter the industry because they may begin a price-war from the already established industry producers. According to Kumar, “This is always true that in the midst of differentiated product, it is difficult to make a new product. The second reason would be that some of the firm’s may possibly control resources that enable them to produce products at lower costs than the others within the industry. Legal restrictions also play a very large part in oligopoly, this is because patents are highly regulated, and only a certain amount of the firms within the industry can acquire in order to produce the product.

We can also look at the economic scale, because in certain cases larger firms are able to meet the demands of the consumer. This leads to the smaller firms not being able to meet certain demands from the consumer. As we know larger firms can produce larger quantities of products were smaller firms are not able to produce the amount which will cause the consumer to go with the larger firm. Entrepreneurs can also play a role in this as well, this is due to the individual under selling the other rivals. When they do this, they can eliminate their competitors and control the market. Certain oligopolies have been created because certain firms merge together thus, they increase their market power. The last reason would be that it may be difficult in entering the industry. Again, this may come down to the amount of capital that is needed to enter the industry.

Oligopolies are common in our economy. An example of this is the Pharmaceuticals industry. Big Pharma controls nearly all of the productions of vaccines, and all medical medications throughout the world. If we look at the largest of the pharmaceutical companies, we see at least ten. These companies work together to help produce their products but they also work together to keep the prices of their companies at a certain price in order to make profits. We hear about them throughout the year and the government has been trying to help control the rising prices for the countries medicines for the last few years. The issue is that even with the corporations raising their prices consumers will pay, because they need these medications to survive or just to live comfortably.

Another key oligopoly in today's world is the cellular phone Services, we can name Verizon, AT&T, Sprint, and T-Mobile to name a few. These corporations control just about all of the cellular services within our country as well as worldwide. Each corporation has different packages that they sell to their consumers, and they keep their prices close to one another. This helps them all make profits and it also helps them maintain their consumer base. They all sell the same phones that are in the market and they can help each other make money because they can set the prices in order to keep their consumers paying for the services provided. In today's world with the smartphones most of the population performs personal business with these types of devices. This is something that no matter how high the rates go people will still purchase the services, because the population is dependent on these services.

References

• Kramer, L., (2019, June 25), What are Current Examples of Oligopolies? https://www.investopedia.com/ask/answers/121514/what-are-some-current-examples-oligopolies.asp
• Kumar, M., (N.D), Reasons for The Existence of Oligopoly(7 Reasons) https://www.economicsdiscussion.net/oligopoly/reasons-for-the-existence-of-oligopoly-7-reasons/7344