OLIGOPOLY

Meaning- Competition among the few sellers. Firms may be

producing either homogenous products or may be having
product differentiation in a given line of production.
• Few sellers
• Homogenous/distinctive products
• Blocked entry
• Imperfect dissemination of information
• Interdependence
• High cross elasticity
• Advertising
• Constant Struggle
• Lack of certainty
• Price rigidity
• Kinked demand curve
Kinked demand curve-
 Sources
• Huge capital investment
• Economies of Scale
• Patent rights
• Control over certain raw material
• Merger and takeover
Pattern of behaviour in oligopolistic market

• Price leadership
• Collusion/Cartels
• Price wars
• Secret price concessions
 Oligopoly

• Airlines industry
• Petroleum refining
• Power generation and supply in most of the parts of
the country
• Automobile industry
• Long distance road transportation by bus. Many of
there routes have buses operated by limited numbers
of operators.
• Mobile telephony.
• Internet service providers
• Cement
• Electronics
• In India, an example of this would be mobile
telephony - There are only a few operators,
examples of which are: Airtel, Idea, BSNL,
Reliance
 Fare hike: Cartelisation, take airlines to CCI (ET 2013)

• APAI – Air Passengers Association of India

• CCI – Competition Commission of India
• Indian Domestic Carriers
 KEY POINTS
• The airlines hiked airfares in tandem by 25% over one
week
• Festive season is around
– Ganesh Chaturti (September)
– Navratri (October)
– Diwali (November)
• The first one to do so was SpiceJet and others followed
• The fare hike was effective immediately without any
notification
– Reasons cited were rise in input costs
 …

• APAI filed a petition with CCI

– “There has been a hike in the aviation turbine fuel
a few days ago and all the airlines have increased
the fares by 25% one after the other. This clearly
goes to show that a cartel is in operation”

• Enquiry by CCI against Cartelisation

 Oligopoly Characteristics
Characteristics of oligopoly
• There are few sellers of
homogenous product or
service
• Source of Oligopoly
– Huge Capital investment
– Limited Government permit
Characteristics of Indian Airline industry
• There are a few domestic
carriers in India
• Sources of oligopoly
– It takes huge investment to
start an airline
– It is very difficult to get a
government permit
 DUOPOLY

A market in which two giant brands control most of

the product being sold and therefore have a great
amount of influence over the factors involved in the
selling.  

Some examples would be

Visa & Mastercard –International credit cards
Reuters & Associated Press -International news
agencies
Pepsi and Coke
Jio vs Airtel vs Voda Idea: 2019 rings in a year
of intense telecom battle
• 2019 is likely to be the year when Bharti Airtel
and Vodafone Idea, which have ruled the roost
in India’s mobile telephony industry for
decades, will get dislodged from their thrones.
Their place will be taken by disruptor, Reliance
Jio, which could become the largest mobile
telecom operator in the country.
 Oligopoly
• The music industry has a 5-firm concentration ratio of 75%.
Independents make up 25% of the market but there could be
many thousands of firms that make up this ‘independents’
group. A market structure therefore may have many firms in
the industry but it is dominated by a few large sellers.

Market Share of the Music Industry 2002. Source IFPI: http://www.ifpi.org/site-content/press/20030909.html