Concept in Definition ABC

At the request of the microeconomics, an oligopoly is a type of market in which it is dominated by a very small number of sellers. Then, in the face of the state of affairs, it turns out that each oligopoly is aware of what is happening in the competenceTherefore, inevitably, the decisions of one will always end up affecting those of others and vice versa. In an oligopoly it is unthinkable and impossible for each company to be independent of another, always the decisions that are made in a certain business will affect and influence the otherThat is to say, this is what will mainly keep them active, that close collaboration to reduce competition to the minimum. One of the main characteristics of this type of market is that prices will always be much higher and the production very inferior.

A clear scene of an oligopoly it will be that there are several companies, but none of them, for all that we mentioned above, will be able to prevail over another. In the oligopoly there is very little concern about giving the best to the consumer or

client, simply and simply because companies are more than anything busy fighting among themselves, to get rid of the market to each other and are concerned and concerned more than anything with discovering the strengths and weaknesses that present.

Some basic characteristics to recognize an oligopoly and let there be no doubts about it: in an oligopoly the competition doesn't really exist, since in reality the Commerce It is intended for a limited number of companies, in which obviously there will be no space or place for new proposals. The oligopoly basically produces two types of goods, the homogeneous or raw materials and the differentiated, which are those that observe a greater incidence of process in its production. And finally dumping, which is that resource that supposes the reduction of prices, including the costs of production, to maximize profits, is a one of the tools most used by the oligopoly and this shows why competition does not exist in this type of market.

Some solutions that companies use so that the oligopolistic state is not so evident is to "differentiate" their products with respect to the products of other companies so that they do not give as much sensation substitutes and that the consumer then perceives them as different from those of the competition. But of course, that difference will occur in very minimal issues such as the presentation of the product, its packaging, the proximity of the good or product to the consumer's home, after-sales services and distribution networks, among others.

Issues in Oligopoly