Economics and Financial Markets Essay Example | Topics and Well Written Essays - 2500 words

Economics and Financial Markets - Essay Example This is what will be dissertated in the following. There are in fact various different characteristics that are considered as being major in regards to oligopolistic markets, and each and every one of these characteristics is just as important as the next, however each also must be discussed in regards to its differences as well as similarities to the others; basically the main characteristics of oligopoly are: the market is for the most part dominated by only a few certain and particular companies which are all relatively large; the production of identical products which are similar; there are significant barriers to entry; the basic interdependence of production decisions within the market. In other words and to be more specific, an oligpolistic market basically exists when there is a small number of firms which dominate the supply to an entire market. The specific degree of market concentration is very high here, and "Firms within an oligopoly produce branded products (advertising and marketing is an important feature of competit ion within such markets) and there are also barriers to entry." (Tutor, 2007). Another severely major characteristic in regards to oligopolistic markets is the fact of how there is interdependence between firms; basically this means that each separate firm must take into account for themselves the facts and the likely reactions of the other firms, and this is especially true when they are making pricing and investment decisions. Although the olipolistic markets are considered as being incredibly beneficial and positive in many ways, there are also certain downfalls, such as the fact that there is uncertainly created in such markets as these, and so therefore economists seek to model this through the use of game theory. What are the Characteristic Forms of Competition in Oligopolistic Markets There are various different characteristic forms of competition in markets such as these, and the forms of competition are actually one of the most deciding factors in regards to the outcomes of such markets. Basically, imperfect competition is the most well known and popular type of competition in this regards, and there are many implications in regards to this form of competition, as the main significance of the four basic characteristics of this structure is that