What kind of market structure exist for oil producers?
Not what you're looking for?
I need help understanding the questions being asked below.
1. This week, we will be studying different market structures. And remember monopolistic competition is not the same as monopoly or competition, it is its own unique market structure.
Also, remember we are describing product market structures, not industries. And, as you'll learn when you do the simulation for WK4, many firms operate in multiple market structures since they have multiple products. So, please do not confuse things and label firms with market structure terms. (The terms are different anyway; e.g. a firm that operates in an oligopoly market structure is called an oligopolist.) You should start the WK4 simulation very soon this week as it will help you understand these different market structures better.
What kind of market structure exists for the oil producers (i.e. the ones who pull it out of the ground and ship and sell it as crude oil)? What does this market structure tell us about the pricing, output and general market behavior of crude oil suppliers (not be confused with refiners or retailers of gas)?
2.Some might say there is a progression (for new product markets) from an initial monopoly to an oligopoly to monopolistic competition to perfect competition.
What do you think? How does this happen? Can you think of examples of products where this might be true?
Purchase this Solution
Solution Summary
What kind of market structure exist for oil producers?
Solution Preview
1. For the oil producers, this is a oligopoly market. There are only few countries which have oil and these guys (12 from OPEC) produce most of the crude to supply to rest of the world.
With oligopoly, two things can happen, 1) Cartel, 2) No cartel. We look at them separately.
Cartel,
If all 12 countries agree to limit production (provided that nobody cheats and produces more), then this oligopoly will become a monopoly. With monopoly, we know that prices are high, firms ...
Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.