Advantages and disadvantages of the oligopoly market system

This essay will discourse the advantages and disadvantages of the oligopoly market system. Supermarket has brought into the service for adult male for long. The roots of supermarkets are the Co-operative of the 19th century. At the beginning of the early twentieth century the people come up to an thought for selling goods. After that there go the first Supermarket which was set up in January 12th, 1948 in UK. ( Brainy History, 2010 ) Equally shortly as the first supermarket has been set up, a big figure of supermarkets came out such as Tesco and Sainsbury ‘s. The supermarket industry is now developing in a really high velocity. As the supermarket is one of the great betterments in people ‘s day-to-day life, it becomes one of the most of import topographic points for all the people. Today, the supermarket industry in UK has already been changed into oligopoly market. This essay will discourse the features of oligopoly market, and so discourse the kinked demand curve, non-price competition and the selling mix in the oligopoly market.

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First of wholly, an oligopoly market means that several comparatively mutualist companies which concentrate the supply and compete with each other. Therefore, this become extremely competitory and the oligopoly companies sell the homogenous merchandises which are branded. ( Tutor2u, 2010 ) If the company sells the homogenous merchandises, the consumers will non acquire the new and better merchandise in a really short clip because of the competitory between the houses. They all sell the same merchandise so that there wo n’t be force per unit area for them to be survived in the UK Supermarket market. Another feature of oligopoly market is that the market has been controlled by a few large houses. As a consequence, these companies will command the market as they like. That may allow another feature happened which is called monetary value shaper. ( Tutor2u, 2010 ) Monetary value shaper is a sort of people or house who set up the monetary value for the merchandise in the market. These people could easy command the market in a manner the oligopoly houses want, so that the consumers will non acquire some penchants in this sort of market, such as price reduction, publicity and so on. Therefore, from the features above, it easy shows that the oligopoly market does immense harmful for the normal consumers. If the UK supermarket support on being like this, the consumers will non acquire penchants any longer.

The following point which is traveling to speak about is the kinked demand curve. The clean country is where monetary value stableness happens ( from figure 1 ) . These oligopoly houses ever use the non-price competition to increase their end product measure. Harmonizing to these two figure, in this instance, there are no lifting in monetary value so that the effect is what consumers want to see.

Non-price competitions, is a sort of competition which is non focus on the monetary value. That shows there are many other competitions in this market. From the Tesco.com and Asda.co.uk, it shows that the Big Four ‘s official web sites are some promotional activities, for illustration price reduction and hard currency back. Although, there are some different methods for non-price competition.

Figure 1:

Figure 2:

Reported by TIMESONLINE 2007, Tesco, Asda, Sainsbury ‘s and the former Safeway, and the dairy companies Wiseman, Dairy Crest and Cheese Company are uncertainty for the dairy merchandise monetary value in 2007. As a consequence, Tesco perchance acquire a figure of figure for about 80 million measure. After that, Tesco is traveling to acquire back the money by jurisprudence. So that the instance shows that there are some errors in this market system. This may besides damage the market system excessively and the consumer assurance can be lost at the same clip.

The last and which is the most of import that can non be ignored is the selling mix for the oligopoly market system. First of all, in an oligopoly market, the topographic point for which the consumers can travel to purchase the merchandises are chiefly the Big Four. The consumers can non hold many different picks for taking the topographic point to purchase things so that Big Four has already command the market as they want. Then, the monetary value can merely put up by the monetary value shaper. In an oligopoly market, the monetary value shaper is the oligopoly house which shows that the houses can put up the monetary value as they want. For the merchandise, every oligopoly company produces homogenous merchandise and service. The Big Four use their egos ‘ advantages to construct high barrier to entry which is to protect their market portion. These will do the consumers own less picks for purchasing the merchandise. Promotion besides does n’t ever happened in the oligopoly market. All in all, the oligopoly market do harmful for the consumers.

In decision, from the treatment above, we know that the features of ver, the maximal competition in the oligopoly market can be advantageous to the betterment in supplying assorted merchandises to run into the demands of consumers. It will be meaningful in their oligopoly market and the selling mix and kinked demand curve shows that the oligopoly is good to the consumers. And oligopoly is besides good for Sellerss excessively. What is more, our consumers are able to bask a well-developed buying environment.

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