Question

List examples (firms or industries) in Hawaii that belong to the Oligopoly market structure. Why would you say so?

Answer 1

Oligopoly is a form of market structure. It is in contrast to perfect competition market model . In an oligopoly structure the market is controlled by few large firms. The market is centralized around these large firms. There are small firms but they are nowhere in competition to these giant firms. These firms collude and compete in cooperative manner so that market remains under their control.

Example of HAWAII

HAWAII has a long history of oligopolical market economy. Three types of industry is particularly an example of this market structure . One is the SUGAR Industry of earlier times and the present AGROCHEMICAL industry and HOUSING and Real Estate sector.

In the sugar industry the Big Five were particularly famous . These big fives were Castle and Cooke , Alexander and Baldwin , C Brewer&Co. , American Factors,Theo H.Davis &Co.

Similarly in agropharmacy sector the big players are Mosanto , Dow , DuPont, Syngenta, BASF.

Why they represent oligopolistic system -

​​​​​The bigger firms donot allow growth of new and smaller firms. Thus they literally control the entire sector. Both price and production is guided by them. Like in the agrochemical sector the big five controls around 90 percent of the sector. The initial competition turns into collusion. For example in the sugar industry the CEOs of one company became board members other companies.

The profits earned are huge since they control prices and because of mutual collusion there is no competitive adjustment of prices.

With economic power comes political power. The big firms started supporting political parties like the BIG FIVE favoured Hawaiian Republican Party.

Thus the control over policies also comes gradually which furthur entrench their grasp over the system. So it becomes a self sustaining vicious cycle where each one supperts and help others grow. The control remains in few hands itself. Customers have little option. They have to choose one from these itself.