Question

Question 9 (3) Describe what you understand under the following concepts: 9.1. Oligopoly 9.2. Monopolistic competition 9.3. How a monopolist can become more profitable by means of price discrimination

Answer 1

1.Oligopoly market is a market structure type in which-

there are few large sellers and large number of buyers in the market

there are barriers to entry in the market.

Sellers form cartel to have price control over the market. The best example for this type of market can be oil and petroleum exporting countries that is OPEC in which there are few large countries of oil producers with large number of buyers across the world

2.Monopolistic competition is a market competition type in which

There are large number of sellers and buyers in the market .

There are few barriers to entry in the market .

products are slightly differentiated in terms of Shape ,size ,colour etc .

The best example of this market can be toothpaste industry where the raw material is same but different in terms of terms of packaging, size ,shape ,advertising etc.

3. Monopoly can succeed as a price discriminator as compared to other Market type because in this there is only one seller and large number of buyers .So it will have a price control over its product and charge different prices from different customers but in other market types, it is not possible to do because of competition or other reasons