250word replies 1 reference
Logan
The rise of oligopolies has made it harder for new businesses to grow. In an oligopoly, a small number of big companies control most of the market. These companies have strong brand recognition, large financial resources, and cost advantages that make it difficult for startups to compete. Because of this, new businesses often struggle to gain customers, secure funding, or offer competitive prices (Besanko et al., 2020).
Companies in an oligopoly compete in different ways. Instead of lowering prices too much, which could hurt their profits, they use strategies like branding, advertising, and better customer service. Some firms follow a price leader, where one company sets prices and others follow. Others focus on creating unique products or services to attract customers. Since a few large companies dominate the market, they must consider how their competitors will react to any changes they make (Krugman & Wells, 2021).
Profits in an oligopoly depend on demand, costs, and how companies compete with each other. Because there are fewer competitors, these firms can charge higher prices than in highly competitive markets. This helps them earn strong profits. However, government regulations, like antitrust laws, can prevent them from having too much control over pricing and competition.
If I were to enter an oligopoly market, I would choose the telecommunications industry. A few big companies dominate this sector, but new opportunities exist with advancing technology. Investing in areas like 5G networks or fiber-optic internet could give a new company a chance to succeed by offering better services or prices.
References
Besanko, D., Dranove, D., Shanley, M., & Schaefer, S. (2020). Economics of strategy (8th ed.). Wiley.
Krugman, P., & Wells, R. (2021). Microeconomics (6th ed.). Worth Publishers.
Michael
The growth of oligopoly power in various industries has indeed made success for new startup businesses much more difficult. An oligopoly is a market structure in which a small number of large firms dominate the industry, leading to limited competition and creating high barriers to entry for newcomers. As the influence of these dominant firms increases, startups often struggle to compete due to high capital requirements, economies of scale, and established brand loyalty (Shapiro, 2018). In such a competitive environment, new firms face significant challenges in offering products or services that can compete on price or quality with the established players.
Firms in an oligopoly compete through several strategies, including price competition, advertising, and differentiation. However, due to the interdependence of the firms in this market structure, price competition can often lead to price wars, which can harm all firms involved. Instead, firms tend to focus on non-price competition, such as innovating and differentiating their products or services (Tirole, 2017). By doing so, they attempt to capture market share while avoiding the negative effects of price cuts.
The profits of firms in an oligopoly are determined by both the market demand and the strategic behavior of competitors. In the short term, firms can earn economic profits due to limited competition. In the long term though, these profits may be reduced as new technologies or business strategies emerge (Tirole, 2017). In some cases, the high barriers to entry can prevent new competition from entering the market, allowing firms to maintain their dominant position and reap consistent profits.
Now, if I were to choose a market to enter that is part of an oligopoly, I would say the tech industry interests me. Beyond the earning potential in the industry, I just think it would be interesting to be more educated and have a deeper understanding of how technology is being used and created in this day and age. With the need for technology in the world, being part of its growth and understanding the how beyond it all I think is what makes the tech industry so interesting.
References
Shapiro, C. (2018). Competition and innovation: The anti-competitive effects of the growth of oligopolies. Journal of Economics, 34(2), 128-142.
Tirole, J. (2017). Economics for the common good. Princeton University Press.