Core-017 Oligopoly
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About Core-017 Oligopoly
About the Teacher
Jay Moulton
Jay Moulton is a business veteran. In short:
- Corporate finance and turnaround expert in U.S. and Canada
- CEO or operator of numerous companies in many industries
- 30 years of actually applying business economics principles
- Successfully led and invested in several leveraged buyouts
- Director or advisor to 30+ different companies
- Experience in both for-profit and not-for-profit sectors
- Producer of 700 professional videos and several TV shows
- Author of six economics and business strategy books
- Graduate of Harvard Business School MBA program
- Graduate of The Royal Military College of Canada
- Professional electrical engineer
- Governor of the Harvard Club of British Columbia
Oligopoly
MODULE 1
Oligopoly is one of the four market structures. A small number of sellers in an oligopoly make strong competition unlikely in this market structure. Each firm is aware of what other firms are doing and their decisions are influenced accordingly. It is difficult, but not impossible, for new firms to enter the market.
Introduction
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The video uses the airline industry to explain oligopolies. In an oligopoly, there are few firms, homogeneous goods and barriers to entry. Professor Ruebeck then compares the airline industry before and after regulation.
An oligopoly is a market structure in which a small number of firms offer similar products. Firms both co-operate and compete with one another as they try to maximize profits.
In an oligopoly, the market is dominated by a small number of sellers. Because there are few sellers, the decisions of one firm influence and are influenced by the decisions of other firms.
As an example of the difference between a regulated industry and an unregulated industry, let's look at airlines.
Case Study - Airlines Versus OPEC
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The video compares collusive and non-cooperative industries using OPEC and the U.S. airline industry as examples. In an oligopoly, there are few firms, homogeneous goods and barriers to entry.
When firms collude in the marketplace the price is no longer established by the market. Consumers overpay and firms benefit from this practice.
In this example, we compare OPEC to the U.S. airline industry. OPEC is a cartel or a "collusive oligopoly," while the U.S. airline industry is a non-collusive oligopoly.
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