Essay: Disadvantages of Oligopoly

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Essay: Disadvantages of Oligopoly

Sample Essay

By one of the firms lowering its prices, it follows that it will make more sales than the other firms as the price lowering will attract the society for it is working in favor of the society. However, it should be noted that it is not easy for any of a single firm to act in its own way since all the actions of a firm are controlled and monitored by the other firms. This means that the set agreements as well as the prices should be followed in order to prevent any wars in the market. This means that oligopoly is not good to the society since it is like there is no competition in the market (Case & Fair, 2007). Furthermore, there is barrier to entry and therefore the few suppliers dominate the market and all they set is final and in most of the cases, the final customer is financially wasted. The frequent price increase cause social unrest.

In the case of the beer industry having few large firms and many small firms, it is also a form an oligopoly. It should be noted that an oligopoly is a form of a business in which the large percentage of the market share is dominated by a few suppliers. This means that the market is dominated by the few firms which take the large percentage of the market share but the remaining part of the market share goes to the many small firms in the market. It therefore follows that the beer industry will be in such a way that the large few firms take the largest share of that market while the remaining part will go to the many small firms. The many small firms will have no say in the market but to follow the set standards.

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