Oligopoly - it is for such a structure?

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In our time to find a country in which all the conditions of pure competition, is quite difficult.Almost every market is dominated by one or a few monopolies, which have a decisive influence on its further development, and if not for the constant control by the public authorities, the opportunity to take entrepreneurship at the current business would be far less.One of the most common forms of imperfect competition today is an oligopoly.This concept for many people is still vague, and so let's look at it in more detail.

definition

Oligopoly - a market such a form of imperfect competition in which a given market there is a very small group of sellers.The increase in their numbers at the expense of newcomers is either impossible or extremely difficult.In other words, an oligopoly - is when sellers can be counted on the fingers.

Signs and types

are the following features of the structure of the market:

  • standardized or differentiated products.
  • large number of buyers and a small number of firms.
  • presence of strong protective barriers to entry of possible competitors.
  • interdependence of firms from each other, which somewhat limits the control of prices.

There is another definition of this type of competition, which is closely related to the value of the Herfindahl index.So it called indicator that can be used to quantify the degree of monopolization of the market.It is calculated by the formula:

HHI = S12 + S22 + ... + Sn2, where

S - the percentage of sales of each of the firms.

its maximum value is 10,000 (pure monopoly), and the minimum value is limited by the ratio 10,000 / n, where n - number of companies in the industry (with the proviso that the proportion of sales of these companies are equal).It is believed that an oligopoly - a market for which the value of the index is greater than 2000. Since 1982, this index plays an important role in the "antitrust" legislation: if the ratio in some industries than 1000, the government begins to control any M & A firms.Depending on what type of products produced on the market, it decided to allocate the following types of oligopoly: clear and differentiated.In the first case made uniform standardized product (eg cement, aluminum, copper), and the second - a variety of products of the same functionality (eg, cars, cameras, tires).Cartel - also oligopoly.This conspiracy of a small number of companies with respect to production volumes and prices in order to increase the profits.If it all together in the industry, in this case it behaves like a monopolist.

Oligopoly: life examples

Some people wonder, "Why in Russia such expensive loans?" The bankers are justified by high risk and high cost of raising funds.But really - it's just a screen behind which hides a higher (in comparison with European figures) margin.Half of the entire banking system is controlled by six banks: Bank of Moscow, VTB 24, Agricultural Bank, Gazprombank, Sberbank and VTB.There is a classic case of an oligopoly, and even under the wing of the state.As other examples of passenger aircraft market ("Airbus", "Boeing"), the market for cars, large household appliances and so on. D.