MONOPOLY AND OLIGOPOLY
Oligopolistic markets are most common form of markets we get to see today. One of the most fierce oligopolistic competition exists in the automobile industry across the world.
Duopolistic market with exactly two suppliers is not very common. However, there are number of products that have two dominant suppliers plus a few smaller ones. For example, in aerated soft drinks market, Coca Cola and Pepsi represent two dominant suppliers in many countries.
True Monopoly generally exist only in government controlled markets. For example provision of civic services such as sewage disposal is generally monopoly of local self government bodies such as municipal corporations. Railways is a government monopoly in India.For instance, a government can create a monopoly over an industry that it wants to control, such as electricity. Another reason for the barriers against entry into a monopolistic industry is that oftentimes, one entity has the exclusive rights to a natural resource. For example, in Saudi Arabia the government has sole control over the oil industry. A monopoly may also form when a company has a copyright or patent that prevents others from entering the market. Pfizer, for instance, had a patent on Viagra.
Monopoly in private business are rather rare, and even then they only approach monopolistic power bur are not perfect monopolies. As a matter of fact governments in many countries have special provisions to control monopolistic operation. For example, Microsoft which is considered a monopoly for operating system and some other software for personal computers is facing many litigation on the charge of following monopolistic practices.
Some times very small businesses are also able to enjoy monopolistic power because of their location and reputation. A hair stylist or fashion designer may enjoy such high reputation that many rich and the famous insist on using his or services. Also, a retail store with no other store in vicinity may enjoy a monopolistic advantage in that locality.
Duopolistic market with exactly two suppliers is not very common. However, there are number of products that have two dominant suppliers plus a few smaller ones. For example, in aerated soft drinks market, Coca Cola and Pepsi represent two dominant suppliers in many countries.
True Monopoly generally exist only in government controlled markets. For example provision of civic services such as sewage disposal is generally monopoly of local self government bodies such as municipal corporations. Railways is a government monopoly in India.For instance, a government can create a monopoly over an industry that it wants to control, such as electricity. Another reason for the barriers against entry into a monopolistic industry is that oftentimes, one entity has the exclusive rights to a natural resource. For example, in Saudi Arabia the government has sole control over the oil industry. A monopoly may also form when a company has a copyright or patent that prevents others from entering the market. Pfizer, for instance, had a patent on Viagra.
Monopoly in private business are rather rare, and even then they only approach monopolistic power bur are not perfect monopolies. As a matter of fact governments in many countries have special provisions to control monopolistic operation. For example, Microsoft which is considered a monopoly for operating system and some other software for personal computers is facing many litigation on the charge of following monopolistic practices.
Some times very small businesses are also able to enjoy monopolistic power because of their location and reputation. A hair stylist or fashion designer may enjoy such high reputation that many rich and the famous insist on using his or services. Also, a retail store with no other store in vicinity may enjoy a monopolistic advantage in that locality.
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