Is Duopoly Exist in Indias Aviation Industry? by Pratik Salvi

On the other hand, sellers determine the supply side by producing goods or providing services based on consumer demand. These forces influence prices, which act as signals that allocate resources efficiently in a well-functioning market. When demand for a product or service is high but supply is limited, prices tend to rise.

1. Oligopolies in history include steel manufacturers, oil companies, railroads, tire manufacturing, grocery store chains, and wireless carriers.
2. This natural monopoly ensures that electricity is widely accessible and affordable for the general population.
3. Another approach is for firms to follow a recognized price leader so that when the leader raises prices, the others will follow.
4. Such competition can be waged through prices, or through simply the individual company expanding its own output brought to market.
5. Understanding market structure helps identify inefficiencies and opportunities for improvement.

Case study of oligopoly on automobile industry

This gives the company the power to dictate the terms and prices to the suppliers, as they have no other options for selling their products. The corporation can use this advantage to negotiate lower prices and favorable terms, ultimately benefiting themselves at the expense of the suppliers. The firms under oligopoly may produce homogeneous or differentiated product. Under oligopoly, there is complete interdependence among different firms. So, price and output decisions of a particular firm directly influence the competing firms.

Profit margins are thus higher than they would be in a more competitive market. The different types of markets also lead to varying levels of efficiency. In perfectly competitive markets, where there are many buyers and sellers and no barriers to entry or exit, resources are allocated efficiently. On the other hand, in monopolistic or oligopolistic markets with fewer competitors, firms have more control over the pricing scenario.

The Oligopoly Market: Example, Types and Features Micro Economics

There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly influence the others. The economic and legal concern is that an oligopoly can block new entrants, slow innovation, and increase prices, all of which harm consumers. Monopolies can negatively impact consumers and competition by leading to higher prices, reduced consumer choice, and potentially lower levels of innovation.

Factors Influencing Market Structure

1. Governments sometimes respond to oligopolies with laws against price-fixing and collusion.
2. Indian Airlines are likely to order around 1500–1700 planes over the next two years.
3. Building multiple competing electricity grids would be inefficient and costly.
4. With just four companies controlling nearly two-thirds of all domestic flights in the U.S. as of 2021, it has been purported that the airline industry is an oligopoly.
5. The global tech and trade transformation has changed some of these conditions.
6. For example, in monopolistic or differentiated product markets, consumers may have brand loyalty or preferences based on product differentiation.

Duopoly is a market structure where there are only two dominant firms that control the majority of the market share. These firms often engage in strategic decision-making and can have a significant impact on prices and competition within the market. A natural monopoly is a situation where one firm can efficiently provide a good or service at a lower cost than multiple firms due to economies of scale. A classic example of a natural monopoly is the provision of electricity. In many countries, there is often only one major electricity provider that serves the entire population.

Firms in an oligopoly set prices, whether collectively—in a cartel—or under the leadership of one firm, rather than taking prices from the market. Oligopoly refers to a market situation in which there are a few firms selling homogeneous or differentiated products. Oligopoly is, sometimes, also known as ‘competition among the few’ as there are few sellers in the market and every seller influences and is influenced by the behaviour of other firms. A firm will be in a strong position if few firms produce close substitutes for its own brand.

In August 2024, a federal judge ruled that Google, owned by parent company Alphabet Inc. (GOOG), engaged in illegal practices to maintain a monopoly over online search. Though the ruling didn’t contain remedies or a decision to break up Google, it was widely seen as a major moved toward breaking up or limiting the power of big tech firms through antitrust action. For example, if an airline cuts ticket prices, other players typically follow suit. Unlike a monopoly, where a single corporation dominates a certain market, an oligopoly consists of a select few companies.

Another approach is for firms to follow a recognized price leader so that when the leader raises prices, the others will follow. Companies in an oligopoly benefit from price-fixing, setting prices collectively, or under the direction of one firm in the bunch, rather than relying on free-market forces to do so. Despite the presence of other food delivery apps in India, Zomato and Swiggy continue to dominate the market due to their extensive reach, strong brand presence, and efficient delivery networks. Their duopoly oligopoly examples in india status has created a competitive environment that pushes them to constantly innovate and improve their services, ultimately benefiting the consumers. Market structure refers to the organizational characteristics of a market. Understanding the concept of a market is crucial as it determines the level of competition within a market, which in turn affects pricing, product differentiation, and overall market dynamics.

It can be a physical location like a marketplace or a virtual platform like an online marketplace. The market facilitates the interaction between buyers and sellers, enabling transactions. In India, markets for automobiles, cement, steel, aluminium, etc, are the examples of oligopolistic market. If conditions are right, companies in the oligopoly will come to realize that they are best served individually not by competing tooth-and-nail. Instead, they can achieve higher profits by coordinating and cooperating on particular aspects of business, such as setting prices or limiting customer options.

If the firms produce a differentiated product, like automobiles, the industry is called differentiated or imperfect oligopoly. If the firms produce a homogeneous product, like cement or steel, the industry is called a pure or perfect oligopoly. Oligopolies exist naturally or can be supported by government forces as a means to better manage an industry. Customers can experience higher prices and inferior products because of oligopolies. However, this does not happen to the extent that it would through a monopoly, as oligopolies still experience competition. A market is a place or system where buyers and sellers come together to exchange goods, services, or resources.