Question

Identify a firm which operates in monopolistic competitive environment and a firm which operates in an oligopoly environment. Explain how you concluded the firm was monopolistic competitive or an oligopoly.

Then describe what are the challenges to profits faced by each firm? Which firm is likely to have a much higher rate of return? What challenges to profits arise due to supply chain and intermediary consumers such as processor and distributors.

Answer 1

There is a variance between the operations of Monopoly and Oligopoly market. The monopoly has complete possession on the product and we will not see any competitor in the market. It purely single ownership expand the operations to the all corners under the same roof. There is a lot of returns in the way of profit due to no competition in the market. However, the consumers have no choice to choose the brand or price regarding this product in the market.

The market of oligopoly has some variance to compare with monopoly market. Here, the small producers or sellers shared the market due to reducing the competition of the product. Here, the intermediary persons of the product carriers have benefitted little compared to monopoly market and also the consumer has some space to choose in the price of the respective product.

In overall comparing of both monopoly vs oligopoly market, the profits more attained had monopoly compared to oligopoly. Because there are no competitors in monopoly so the price decision always had with producers of the product. The rate of returns also attained maximum to the monopoly market. In oligopoly had attained less rate of return compared to monopoly market due to the price stick with reasonable or quoted with less price. The overall profit goes to monopoly market but intermediary consumers have no choice to get good profits, however, it is possible in the oligopoly market. After a brief comparison between the monopoly and oligopoly, the maximum profits and rate of returns acquired by the monopoly market.