Question

How would you determine whether a market is oligopolistic? Is it important for a manager to recognize the existence of oligopolistic competitors in the market in which their companies operate?

Answer 1

The Oligoilistic Market can be recognized by in many ways, their is no single approach, The first and very basic way to judge this is through market analysis which can be done through finding concentration ratios of the market, which is further analysed through its intensity.

The important part lies in the question that why do we need to recognize the type of competition in our market. First of all we need to understand that that each market form operates on certain principles which are not obligatory but self governed. When a firm work in a perfect competition it is a price taker, where as in the monopoly the firm is price maker, same way such operations can be predetermined when we know that the market is of certain form.

And these operations include like product differentiation, price decision, market structure, market size, the consumer sector etc.

So, for deciding that what all of the above actions are taken in which manner,it is very important for the firm or manager to know that in which market form they are operating.

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