Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsMarket3 Marks
Question
Explain any three characteristics of Oligopoly.
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Answer
Characteristics of oligopoly:
$1.$ Few sellers and numerous buyers:
Under oligopoly, the number of sellers and producers is less in the market.
There exists about two to less than ten or twenty firms in the market.
Owing to these circumstances, a few number of sellers have a monopoly control over the market.
On the other hand, there are numerous buyers in such market. So, neither these buyers have much influence on the market price nor they are given much importance.
$2.$ Similar or substitutable products:
Firms sell identical or substitute products in oligopoly. This also means that when the firms in a market, produce and sell identical or substitute products, it is Oligopoly market. For example, products like salt, crude oil, tea, etc.
When producers produce identical products there exists imperfect oligopoly in the market. For example, oligopoly exists for products like cold drinks, motorcycle, etc.
$3.$ Admittance of firms:
In the market of oligopoly, the entry and exit of firms is free or regulated according to the type of oligopoly followed.
If there is free oligopoly in the market, the firms can freely enter or exit the market, whereas if the oligopoly is restricted, then the entry and exit of firms is regulated.
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