Oligopoly Cases Essay Example

advantage to locally produced bread. What is more, some of the technical developments of the sass were adapted to small-scale baking.

Finally there was a shift in consumer tastes away from mass-produced bread and towards the more individual styles of bread produced by the small baker. The effect was a growth in the number of small bakers, who now found that entry barriers were very small.

In recent years, however, the small baker has faced a new form of competition. This is from the in-store bakeries in supermarkets, which now have about 17 per cent of the market. These produce not only the standard loaves, but also the more specialist breads which were previously produced only by the small bakers. Not to be outdone, the plant bakers are now also producing a wider range of breads, many produced for the supermarkets to be sold under their own brands.

Life is becoming harder again for the small baker. Questions Are the large oligopolies bakers and the small bakers catering for the same market? Yes, they are. Answer to this case study: This case study is classified as Oligopoly in economic market analysis. An Oligopoly market means a market has a small number of large mutually interdependent firms which has a differentiated or standardized product.

The Oligopoly market has a market entry and exit difficult. The non-price competition is important.

Allied Bakeries and British Bakeries, produce bread for a nation-wide market. These TV bakeries some have a significant market share and can therefore affect the production prices in the market in 1 9505 and 1 sass. The two bakeries sectors creates a tendency towards the united and

balanced market price of goods, because there is an especially strong dependence of bakeries on each other, and therefore even the slightest change in price by one of them significantly affects the behavior of other bakeries.

But then in the sass, the rise in oil prices and hence the rise in transport costs gave a substantial cost advantage to locally produced bread. That's reflect the growth in the number of small bakers. These bakeries create differentiated goods (pastries) and that are substitute to each other, there as a shift in consumer tastes away from mass-produced bread and towards the more individual styles of bread produced by the small baker.

But there was a huge problem that is a competition exists both in the price and non- price forms, represented by product innovations and advertisement and that is where output is differentiated, a problem of delimiting the market of the given product arises. If reduce price and competitors match the price cut then move along more inelastic demand segment. This price is set at a lower level the bakeries could maximize profit when not being threatened by the entry room other sectors.

And If increase price and competitors do not follow then move along the more elastic segment and the marginal revenue curve has kink. Moreover, there are so many possible ways in which the firms might interact with each other or they might also act non-cooperatively, acting in their own self-interest, but taking into account the actions of other firms. At the end, Oligopoly presents the greatest challenge to economists. The essence of oligopoly is strategic interdependence. Each firm anticipates actions of its rivals when

making decisions.