Quiz 12: Between Competition and Monopoly
In oligopoly market, there are few sellers, who control the entire market. There are few industries in the market which comes under oligopoly market. In music industry, Universal Music Group, Sony Entertainment, and Warner Music Group, these music companies are operating under oligopolistic market. In monopolistic competition, there are many buyers and many sellers selling differentiated products. In reality, one can find many industries of monopolistic competition. Soap industry is the best example of monopolistic competition. Pizza shops, burger shops, toothpaste industry are another few live examples of monopolistic competition. In perfect competition, there are many buyers and sellers sell identical product at single price. Perfect competition industries are rare industries in the market. Agricultural products are the best example for the perfect competition. Perfect competition is very hard to find in the reality because products have some kind of differentiation in the market. One cannot find exact similar product in the market.
Payoff matrix is referred to a set up that indicates gains and losses of the all possible decisions of the firms. The following is a set up of a payoff matrix of Volkswagen and Ford. The above payoff matrix indicates the three choices for each firm. They are, hire singer, cut price, and new product. The payoff matrix is empty because it is difficult to determine the entries in it.
In a perfect competition, producers sell homogeneous products at the same price. It is difficult to experience perfect competition in practical market. Oligopoly is a market situation in which there are few firms controlling the entire market. Supplier of building materials may be considered as the oligopoly firms. There are many products advertised on the television which can be considered in monopolistic competition. Cloths, vehicles, cell phones, perfumes, furniture are considered in the monopolistic competition. Some products are not advertised on Television that is disability adaptive products, self defense product, magazines. These products are not advertised but easily available in the market.