Today I will be getting back into my market structure series. So far I have provided a brief introduction to market structure as well as perfect competition and monopolistic competition. These posts have been quite scattered because of my recent Six Week Economics Challenge Series as well as my recent absence, I will explain more in future posts. I will provide links to the earlier posts in this series at the end of this post.Quick recap
In this post, I will be covering the oligopoly market structure. Before I get into oligopoly I want to provide a quick recap of what I am covering in this series. I am covering 6 market structures. They are as follows:Perfect Competition Monopolistic Competition Oligopoly Monopoly Monopsony Oligopsony
The first four market structures in the list are typically discussed in detail in mainstream economic literature. Monopsony is sometimes discussed but in less detail and oligopsony is almost never discussed. Oligoposony might be perceived to have less real life application. I will cover oligopsony because of its real life relevance to Steemit and the Steem platform.What is the oligopoly market structure?
An oligopoly consists of very few large firms and typically has many buyers. Products sold by oligopolies are not identical but tend to be very similar in nature. Oligopolies are likely to be profitable (supernormal profits in economics terminology) in both the short-run and long-run. Price collusion and barriers to entry help maintain profits. The oligopoly market structure has many real life examples, possibly the most of any market structure.
Oligopolies are normally created because of barriers to entry. Barriers to entry are any form of deterrent to new firms that want to enter into the industry. These barriers could relate to the nature of the business such as high start-up costs, prolonged economies of scale, and high fixed costs. Barriers to entry could rel...