The behaviour of firms in an oligopoly - The Australian Automobile Industry

The Australian car industry is clearly an example of an oligopoly. The broad four, Holden, Toyota, Ford and Mitsubishi dominate the industry. Collectively they sell 62% of unfermented cars in Australia. These four firms all have a mixing of local anestheticly produced and imported models, local production is however hard protected with the use of import tariffs, taxes, and quotas. Below is a tabulate showing the market sh are that each manufacturer has.



Oligopolies clear take many forms, they can range from being local to global. An example of a local oligopoly is a small res publica town with only two petrol stations. An oligopoly is essentially a market dominated by a couple of(prenominal) sellers. In a global sense these are industries uniform steel, cars, oil, and breakfast cereals. Because in that location are few firms, each firm must overturn how their policies are going to effect their competitors behaviour.

In some oligopoly industries at that place is a homogeneous product for example steel, oil, etc. In others, the product is differentiated across producers for example cars and electronic goods.
Where the products are homogeneous, there is greater interdependence among the firms in the industry. In these markets, a small change in price will manoeuvre customers to and from the rivals.




In markets where the products are differentiated, producers are not quite as sensitive to each others actions.

Oligopolies have emerged cod to a number of factors. This market structure can very much be traced to some form of barrier to launching like economies of scale, legal restrictions, brand name and brand loyalty or control over an essential resource. These barriers of entry can be thought of as similar but less stern than those of a monopoly.

Economies of Scale

This is perhaps the most significant barrier for entry into an oligopoly. If the minimum efficient scale in an industry is a fairly large size, then only a few firms are needed to produce the output demanded by the market. For the US auto industry, it has been...If you want to get a full essay, company it on our website: Ordercustompaper.com



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