Essay Sample on Monopoly and Oligopoly Firms

Introduction

Monopoly and oligopoly are economic structures that occur when there is imperfect competition within the market (Barry, 2019). A monopoly constitutes just a single firm with goods without close substitutes. On the other hand, oligopoly has got fewer in number but large firms that produce similar products but slightly different. In a monopoly, there is only a single seller who provides goods and services with a significant amount of buyers. Broadly, it implies that the seller controls the price of goods and services. While in oligopoly, there are few sellers, usually less than ten, selling products of the same category.

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Similarly, there is no competition in the monopolistic industry since there is only one seller. While in an oligopolistic industry, there is always intense competition. Finally, in the antonym industry, there is a high price charged compared to an oligopoly where there's a fair price. One seller in the monopolistic firm will decide on the cost of his or her products. That is why it is possible to be higher as compared to the oligopolistic industry.

Companies Operating in Monopolistic Competitive and Oligopoly Industries

In the list given, it is undeniable that group one, which is the accommodation industry, operates in a monopolistic competitive industry. While group two, wireless telecommunication works in the oligopolistic market structure.

Application of Porter's Five Forces

Porter's five forces in economics is a tool to analyze which business is much competitive (Mahat, 2019). It determines the intensity of the competition and after that, attractiveness. They include the threat of the new entrants, bargaining power of the buyers, rivalry among existing competitors, the risk of the substitute goods, and the bargaining power of suppliers. As an investor, in conjunction with porter's five forces of economics, it is more attractive to invest in group one, the accommodation industry. According to the above response, group one industry operates in a monopolistic market structure. Where entry into the market is restricted, it makes it difficult to invest in no threat of listing of new sellers. Another reason why it is attractive to invest in group one industry is that there is no rivalry of competition. According to porter's five in economics, rivalry among existing competitors makes an industry less attractive (Mahat, 2019). In the monopolistic sector, there is only one seller; hence, no competition.

References

Barry, T. S. (2019). Welfare Optimised Network Access: A Monopoly Supplying an Oligopoly. Economic Papers: A journal of applied economics and policy. https://onlinelibrary.wiley.com/doi/abs/10.1111/1759-3441.12252
Mahat, M. (2019). The competitive forces that shape Australian medical education: An industry analysis using Porter's Five Forces Framework. International Journal of Educational Management, 33(5), 1082-1093. https://www.emerald.com/insight/content/doi/10.1108/IJEM-01-2018-0015/full/html