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Monopoly vs. oligopoly sample essay

Monopolies and Oligopolies are both marketing situations that are present in today’s economic system. Many people are aware of what a monopoly is and the federal government has even taken steps to make monopolies in the United States illegal. However many are unaware of the many oligopolies operating in the US economic system today. Monopolies and Oligopolies are similar but not the same, this paper will explore their similarities and differences, and provide examples of both operating in today’s economic system. A monopoly is where one cooperation or business controls the supply of a particular good or service.

In monopolies these firms or cooperation’s not only try to control their respective industry but go out of their way to stop others from entering with heavy restrictions, low price costs, and strategic marketing plans. The business dictionary defines oligopoly as; a few or single supplier effectively controlling the supply and therefore the price of a particular product or service creating a seller’s market. These two situations as defined are similar in the fact that one or few corporations or businesses control the industry and its prices.

The consumer is the target in both situations; you see where its one or few the consumer is forced to pay the prices set by these controlling corporations. Monopolies and Oligopolies differ in a few ways. In a monopoly you have one cooperation that controls the price and supply of the said product or service, allowing for no competition. Or in other words allowing them to charge consumers whatever price that want and even the opportunity to raise prices at any time for no reason thus in a way holding the consumer hostage.

In oligopolies there is more than one major player and this allows for some competition in the industry. It also gives consumers more than one option. If one company lowers the price a consumer may choose to switch companies. The most evident difference as stated above is that monopolies are illegal and mandated by the US government where oligopolies are a common market situation in the United States. A great example of an oligopoly is the US Automobile industry.

There are a variety of manufactures to choose from,however most Americans will agree the major players are Ford, General Motors, Honda and Toyota. These major players in the industry control the actions of each other and their competitors. In 2005, GM offered customers employee pricing. This affected the whole industry, Ford, Toyota and other manufacturers were forced to do the same thing or offer something better in order to match the prices of GM to generate profits in the industry. This is a common marketing strategy for automobile manufacturers, the use these tactics to anticipate the next move of their competitors.

It also can cause smaller manufacturing companies to go out of business as they can no longer compete with these large companies. Monopolies are a little harder to explain in today’s economic system as they are illegal. However they do still exist, for example utility companies usually operate in specific areas where they do not have competition. Consumers are forced to use them do to the region, city or district in which they live. They do not have choices and are required to pay whatever prices their utility company charges for the service.

Another good example would be DirecTV, while there are other cable and satellite companies to choose from they offer a service no other company can; NFL Package. They are the exclusive owner of this service and football fans have no other option that offers them every game anytime at their fingertips. Most notable in recent history was Microsoft, who was inevitably fined and regulated by the US government in 1998. While monopolies and oligopolies have their similarities and differences the consumer is the target of both and is a victim to these multimillion dollar corporations and industries.

Monopolies even if illegal still exist and operate in today’s economy. Oligopolies are very prevalent and still allow corporations and businesses to operate at will against the consumer as long as there is competition among the various players in the industry. Whether a monopoly or an oligopoly the consumer has little to no say in the market situation and one or few businesses are allowed to dictate prices and supply of their respective products and services.

Works Cited Evans, K.(2013, 02 21). Monopoly Vs. Oligopoly. Retrieved from E How Money: http://www. ehow. com/about_4795365_monopoly-vs-oligopoly. html Site contributor. (2013). Dictionary . Com. Retrieved 02 21, 2013, from Dictionary. com: http://dictionary. reference. com/ Stein, T. (1999, November 6). Microsoft Ruled a Monopoly / Court finds firm abused its power. Retrieved from SanFransico Chronicle: http://www. sfgate. com/news/article/Microsoft-Ruled-a-Monopoly-Court-finds-firm-2899336. php.

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