Limitations of Oligopoly

Oligopoly is the term which is used in the context of economics; it refers to that market structure in which there are only few sellers or producers for the good and therefore there is some pricing power available with the sellers. Given below are some of the limitations of oligopoly –

  1. Consumers are at disadvantage in the sense that when few firms join hands and decide to raise price for the good they can do it without any fear of drop in demand since there is no substitute or competition for the products of firms and therefore consumers will have to bear the brunt of rise in price of goods.
  2. In oligopoly few companies become large which results in concentration of power and these companies just because of their sheer size do not allow small companies in the industry to flourish and due to it creativity of small companies go unnoticed as they are just not able to make profits because of big companies having the last word in the industry.
  3. Oligopoly can be regressive in the sense that since few companies join hands and make profits they do not care about improving the product they offer to their customers because innovation take place only when you are desperate and in oligopoly companies are relaxed since they know they will be making profits even if they do not innovate.
  4. It creates unrest and frustration in the minds of general public because oligopoly adds to rich poor divide and people are never happy when few industrialists are making huge profit at the cost of public money.

As one can see from the above that oligopoly market structure can be dangerous one for the economy and that is the reason why this type of market structure is rarely seen and governments do not allow such market structure to flourish by intervening through their policies and regulations.

0 comments… add one

Leave a Comment


Related pages


adjusting entry unearned revenuedefine floating currencydifference between drawer and drawee bankurbanization meaning in hindilimitations of zero based budgetingdifference between a creditor and a debtorcharacteristics of an oligopolyadvantages of managerial accountingwhat is the difference between a wholesaler and a retailersocialism advantagessubstitute goods economicsnondurable goods listexamples of non diversifiable riskglobalization disadvantagewhat is the full form of gsthire purchase disadvantagesdisadvantages of cash managementfull form of rrb banktrial balance meaningadvantages and disadvantages of earned value analysiskpo abbreviationdupont roe analysisunearned income in balance sheetcommand economy advantages disadvantagesconvertible bonds advantages and disadvantageslaw of diminished returnsasset revaluation journal entryjournal entry for salary paiddifference between wholesale and retail bankingthe main difference between a tariff and a quota iswhat is horizontal and vertical analysisstudent loan disadvantagesmoil ipo priceadvantages and disadvantages of transfer pricingdifference between hire purchase and installment systemmerger horizontalsundry assets definitionadvantages activity based costingadvantages of a mixed economyprice skimming focuses on selling products tosystematic and unsystematic risk in financethe accounting for cash discounts and trade discounts aredefinition of nondurable goodsintraday transactionadvantages of zero based budgetingdifference between demat account and trading accountexamples of period costsmeaning of fifo methodjournal entries for provisionsdefine crossed chequedisadvantages of fifogatt full formdefine inferior goodsbhel company in indiaunearned rent revenue adjusting entrypricing strategies advantages and disadvantageswhat are some characteristics of a traditional economyadvantages of socialist economyforex reserves of countriesmarginal costing techniquecentrally planned economy advantages and disadvantagesunearned fees journal entrycapitalism merits and demeritsplr sbifreight means in hindiwhat is the difference between finance lease and operating leasenormal good inferior goodprepayment journal entryadvantage and disadvantage of organizational structurecagr acronymadvantages and disadvantages of future contractsproduct bundling pricingmarket skimming price strategydisadvantages of income statementscarce goods examplescredit sales accounting entryadvantages of trading internationallyppt on fund flow statementautocratic management stylesunqualified audit report examplewhat is difference between account payable and bills payableinfosys kpocomplements in economics examplesmarginal costing in accountingpayback period advantages