Discussion Question Response

In your responses, comment on at least two posts from your peers by providing examples from the news of oligopolistic markets. Compare and contrast with examples of monopolistic competitive markets.

Mark Pendleton posted

This was a good simulation that really helped to understand Oligopolies and the difficulty of them without collusion.

The main features to am oligopolistic market is that there are few sellers in the market of similar or like ideas that are price makers. The firms in this market are able to decrease the quantity supplied compared to the quantity demanded in order to raise the price of each unit of good and create a profit. Oligopolies set their price where the profits are maximized. They make adjustments until the price effect is equal to the output effect.

The way to distinguish a market in a oligopolistic market is from its interdependency on another firm. Unlike a monopoly where the firm only needs to make decisions on what best effects itself, an oligopolistic market firm must make decisions based on the effects it will also have on the other firms in the market. These secondary effects to their decisions can have harmful impacts towards the firm depending on the decisions of the other firms.

Bonnie Penzin posted

So as stated in the textbook an oligopolistic market has only a few sellers and they can ether chose to work together or choose self-interest. As for how they set their prices it again depends on if they want to keep an agreement with the other sellers or choose self-interest. Unfortunately, it seems that even though they “work” together someone out of the group still chooses self-interest. Lastly, the main difference between monopolies and oligopolistic markets are that monopolies set a price that exceeds marginal cost and each company choses their own pricing. Whereas oligopolistic markets could use collusion which is when the sellers come up with a set price or they could agree but then put their company first and us self-interest to profit more for their own business.