Why Most of the Industries Today are Oligopolies

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Why do you think most of the industries today are oligopolies? Q. Why do you think most of the industries today are oligopolies? Oligopoly is a market structure in which there are a few large firms with a concentrated market share, an example of an oligopoly today would be Nike, Reebok and Adidas for shoes. Most industries today are oligopolies, the possible reasons for this would be that oligopolies in contrast to monopolistic competition would be able to earn abnormal profits in the long run as well as the short run, as shown in the previous section The reason for this is that there are barriers to entry and exit to potential firms. Examples of these barriers would be, high capital costs i.e. start up costs for new firms because the existing firms are already operating in a large market and are well established, they would have created a brand image and would have brand loyalty therefore new firms will find it hard to capture the market. Another barrier would be sunk costs i.e. the costs that are not recoverable if the firm decides to close down, e. g new fi...

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