What are some similarities and differences between monopolies and oligopolies? How would you classify Microsoft? How would you classify the power industry in your area? Explain your reasoning.
Oligopoly and monopoly have some similarities, both tend to be relatively large and possess significant market control, but also have a few important differences, oligopoly market has more than one firm. The dividing line between oligopoly and monopoly, however, can be blurred due to the closeness of substitutes and the inclination of oligopoly firms to collude.
One or Few: The primary difference between oligopoly and monopoly is that monopoly contains a single seller, whereas oligopoly has two or more sellers. Such a difference might seem to provide a clear separation. But not necessarily.
Substitutes: In some cases, the difference between oligopoly and monopoly is blurred by the closeness of substitutes. A monopoly produces a good with NO close substitutes. An oligopoly firms produces a good with a small number of relatively close substitutes.
However, the oligopoly-monopoly difference is blurred if an oligopoly firm pursues product differentiation to such an extent that it creates a product with no close substitutes. As such, the ...
What are some similarities and differences between monopolies and oligopolies?