Characteristic signs of oligopoly. Oligopoly What is characteristic of the oligopoly market

Oligopoly - The market on which there are several firms, each of which controls a significant market share (from Greek. «Oligos" is a little bit). This is the prevailing form of a modern market structure.

Signs of oligopoly:

1. Availability in the market of several large firms (from 3 to 15 - 20).

2. Products of these firms may be homogeneous (the market of raw materials and semi-finished products) and differentiated (consumer goods market). Accordingly, the net and differentiated oligopoly is separated.

3. Conducting independent pricing policies, however, price control is limited to mutual dependence of firms and to some extent implemented by concluding agreements between them.

4. Significant restrictions on the entry into the market related to the need for significant investment to create an enterprise in connection with the large-scale production of oligopolist firms. In addition, there are barriers characteristic of monopolies - patents, licenses, etc.

An important feature of such a market is also the fact that companies can take a number of actions (regarding sales and prices of goods) aimed at the impossibility of entering potential competitors.

5. The inexpediency of price competition and the advantage of non-price competition, successful solutions in which they can give market advantages for a while.

6. Dependence of the strategic behavior of each company (the definition of price and volumes of release, the beginning advertising campaign, the implementation of investments in the expansion of production) from the reaction and behavior of competitors, which affects market equilibrium.

In general, the oligopoly occupies an intermediate position between monopoly and perfect competition (the equilibrium price in the market of the oligopoly below the monopoly, but above the competitive).

There are many options for oligopoly: in the industry can be both 2-4 leading firms (rigid oligopoly) and 10-20 (soft oligopoly). The mechanisms of interaction of firms in these conditions will differ. General interdependence complicates the foresight of the relevant competitor's reaction and makes it impossible to calculate demand and utmost income for the oligopolist.

Oligopolistic behavior suggests incentives for agreed actions when setting prices. A significant amount of firms does not contribute to their market mobility, so the greatest benefits brings a conspiracy between firms in order to maintain prices, restrictions on the issue and joint profit maximization.

Collusion - This is an explicit or silent agreement between firms in the industry in order to establish fixed prices and volumes of output or to limit competition between them. Credit is most likely subject to its legality and a small number of firms. Differences between firms in products, in costs, in the amount of demand, the ability to reduce prices in secret from others - comprehension difficult.

If several firms on the oligopolistic market are approximately the same in size and level of medium costs, the price level and production volume, maximizing profits will be coincided. Joint pricing policy will actually turn the oligopolistic market into a pure monopoly. All this pushes oligopolists to conclusion carriage agreements.

If the conspirass is legitimate, manufacturers of the same products often conclude an agreement on the division of the market, and a group of such firms forms cartel. In such an agreement, they are established for all its participants of their share in the volume of production and sales, the price of goods, the conditions for hiring the workforce, the exchange of patents. Its goal is to increase prices in the competitive level, but not limiting the production and sales activities of participants. From here the main problem of the cartel - This coordination of the decisions of its participants about the establishment of a system of restrictions (quotas) for each company.

Question 22. Determination of the price and volume of production in the conditions of oligopoly. Pricing models in an oligopoly

The general theory of pricing in the conditions of oligopoly does not exist. There are a number of models explaining the market behavior of the oligopoly, depending on which assumptions from the firm regarding the reaction of their competitors.

The specific market model for the oligopolist is depicted in fig. one.

Fig. 1. Loan line demand

Model "broken" demand curve (R. Hall, Khitch, P.-M. Siza, 1939) explains why the oligopoly firm reluctantly refuses to decide the "price-release" decision, due to which prices in oligopoly have certain stability in short term With a change in the amount of costs (which cannot be said about the market for perfect competition).

Suppose that three firms X, Y and Z are functioning on the market. The market price was set at the level of R o. Consider how Y and Z firms will respond to changing the price of the company X.

If the firm x increases the price by setting it above the level of R o, then the firms Y and Z are most likely to be followed and will leave prices at the r o level. As a result, the company X will lose buyers, and the firms y and z will expand their part of the market. Thus, the price increase is not profitable for the company X; The demand for its products on the site of Va is enough.

If X will reduce the price in order to increase sales, competitors are likely to answer the same decline to protect their market share. Therefore, a significant increase in the demand of the company X will not receive (the demand for the AD plot is relatively non-ielastic).

As a result of different reactions of competitors for changing the price, the demand curve will take the form of BAD. Both of the most likely option of the consequences of changing the price do not bring a significant positive result (price reduction - an insignificant increase in sales, price increase - sales reduction). Therefore, it can be assumed that prices in this market will be stable (firms are carried out by the policy of "price stiffness").

This assumption can be confirmed as follows. The bending of the demand curve at the point A corresponds to the rupture of the MR line, which is in fig. 1 is represented by broken BCEF. If the MS curve crosses it on the segment of the CE (all points of which correspond to the point KURN by definition), the company has no reason to abandon the price of R o (i.e., the change in MS, expressed in the intersection of several CE segments, will not cause price changes) . Some increases of costs do not lead to a change in the price until the MS curve will rise above the C.

If there is an increase in demand for this product, then the in demand line will shift to the right, and along with it the MR line is shifted, including its vertical portion. Given the intersection of the MS line with the MR line at its vertical site, the optimal price for the oligopolist will remain the previous price, although the optimal volume of release increases. Thus, even with a change in demand for products, the oligopolystyle is not inclined to change the price, but changes the volume of production.

As a result, according to this model you can formulate kournot equilibrium: None of the firms are interested in changing the price of its products while its competitor does not change the price of its products. This is due to the fact that after the firm changes the starting price, in the conditions of oligopoly, it will no longer be able to return to it. As a result, the equilibrium can be established in the oligopoly at the price corresponding to the monopoly. However, this result is less likely to increase the number of competitors in the industry: the likelihood is increasing that someone can reduce the price of its products, disturbing the market equilibrium.

The model of "broken" demand curve has two drawbacks:

1) does not explain why the current price was equal to the r o; It is impossible to explain how this price was established initially (i.e. the model does not explain the principles of oligopolistic pricing);

2) As the economic practice shows, prices are not so inflexible, as follows from this demand curve: in the conditions of oligopoly, they have a clear tendency to increase.

All oligopoly models have common features that can be considered on models of duopolia (Kournot Antoine, 1838 g). Dugolia - Private case of oligopoly, where two manufacturers of homogeneous products are involved, each of which is capable of satisfying all the effective demand in this market. Such a structure is often found in regional markets and reflects all the characteristic signs of the oligopoly. The essence of this model - Each of the competitors determines the optimal amount of supply for itself with a given amount of the ownership of the other, and the combination of these volumes reveals a market price. Thus, this model describes the pricing process in the oligopoly. The main parcel was dringed on the assumption about the reaction of each company on the behavior of competitors. It's obvious that equilibrium duopoly It is that each duopolist establishes the volume of production that maximizes its profits under this volume of its competitor, and therefore neither one of them has an incentive to change this volume. For pricing above the point of intersection of the reaction lines, each company has an incentive to reduce the price established by the competitor, at prices below the intersection point - on the contrary.

Thus, with the assumption, there is only one price that the market can be installed. You can also prove that the equilibrium price is moving gradually from the monopoly price of the price equal to the limit costs. Hence, kournot equilibrium in the industry, where there is only one firm, it is achieved at a monopoly price; in the industry with a significant number of firms - at a competitive price; And in oligopoly - fluctuates within these limits.

The development of this model is pricing model behind the leaderin which the leader establishes not the amount of its production, and the price of its products.

In the market of oligopoly, the monopoly price can be established and without an explicit agreement between competitors. But the more competitors, the more the likelihood that one of them will increase the price of their products for the sake of temporary benefit. For example, the struggle of two oligopolists for the buyer by establishing increasing prices as a result will be reduced to equilibrium between them in the form (that is, the price will decrease to the level with perfect competition).

P \u003d ms \u003d ac

This case, so-called price wars Describes model BerranIn accordance with which firms consistently reduce prices to the level of medium costs, trying to oust competitors from the market.

Usually, the oligopolist firms establish prices and divide markets in such a way as to avoid the prospects for price wars and their adverse effects on profits. Therefore B. modern conditions Their price competition most often leads to agreements.

Most easy way implementation of the strategy of a permanent price ratio is pricing according to the principle of "costs plus". It is applied due to the internally inherent uncertainty market over the demand for goods and the complexity of determining limit costs. The principle, "costs plus" is a pragmatic way to solve the problem of real estimation of marginal income and limit costs, in which certain typical costs take to determine the price, which increases economic income in the form of a surcharge. This method does not require a deep study of the curves of demand, maximum income and costs that differ by product types. For the agreed pricing policy, it suffices to coordinate the magnitude of this surcharge.

Pricing using such a surcharge to costs guarantee sufficient receipts to cover variable costs, permanent costs and an alternative cost of using factors of production.

In addition to the foregoing, the analysis of oligopolistic pricing is increasingly used game theory. It is often noted that oligopoly is the game of characters in which each player must predict the action of the opponent. After the compliance of the possible consequences of various solutions, each company will understand that the worst will be the most rational.

Oligopoly is such a market structure at which a small number of sellers dominates, and the entrance to the new producers is limited by high barriers.

The oligopolistic market is one of the most common market structures in modern economy Different countries.

Almost all technically complex industries such as metallurgy, automotive, electronics, ship and aircraft construction, function in the oligopolistic market.

The first characteristic feature of the oligopoly lies in the neglence of firms in the industry. This indicates the etymology of the very concept of "oligopoly" (Greek. "Oligos" - several, "Polio" - sell, trade).

Usually their number does not exceed ten. Such a situation has developed, for example, in the American steel industry, in the production of primary lead, copper, glass, fur products, etc.

The most high concentration in the US Automotive Industry: for three companies ("General Motors", "Ford" and "Chrysler") accounted for over 95% of the national production of cars in the 80s. Examples and other industries of the US manufacturing industry can be given (production of home refrigerators, vacuum cleaners, washing machines, light bulbs, postcards, telephone sets), for which the high concentration of production is characterized by only several firms.

It should only be noted that these data, as well as all statistical indicators, have obvious disadvantages. They either exaggerate or the degree of concentration. Exaggerate, since they do not take into account foreign and intersectoral competition (in the American market, for example, every fourth car - foreign production), as well as competition from suppliers. It is understood as the degree of concentration at the national level is estimated, and not at the level of regions or individual cities, where two or three local companies often dominate in the markets of some goods and services (brick production, concrete, perishable food products etc.) In addition, along with the classic (tough) oligopoly, in which 3-4 firms play a major role, there is also a soft (amorphous) oligopoly when the main share of products is produced by 6-8 firms.

Oligopolistic situations may occur in sectors producing both standardized goods (aluminum, copper) and differentiated (cars, washing powders, cigarettes, electrical appliances).

The oligopolistic market structure as noted above is the predominant for modern industrialized countries. Russia is also the greatest part industrial products And some types of services are made in oligopolistic industries. In most cases, the composition of the participants of the Russian oligopolistic market of the market is still formed, competition in some industries is not yet developed, in others - it becomes hard, sometimes merciless character, rapid changes occur in the market structure.

To the most characteristic oligopolistic industries Russian Federation refer to the oil production and oil refining industry (including the regional structure and localization of markets); ferrous metallurgy (according to the main types of products and taking into account the specialization of production); non-ferrous metallurgy (production of aluminum, tin, lead, zinc, etc.); production of electromasic and electric motors; machine tool; Motor building; Manufacture of cars, buses and tractors; production of combines, excavator construction; production of television and radio equipment; production of electronic computers; Production of refrigerators, freezers, washing machines; chemical industry (most types of products); aviation transport; shipping.

Oligopoly is characteristic of russian conditions When selling grain, sugar, flax, large battles.

The second characteristic feature of the oligopoly is high barriers to entry into the industry. They are associated primarily with savings on the scale of production (scale effect), which acts as the most important cause of widespread and long-term preservation of oligopolistic structures. The industry acquires an oligopolistic structure if the large size of the enterprise provides substantial cost savings and, therefore, if large enterprises have significant advantages compared to small.

The fact is that large enterprises The industry can never be a lot. Already a multi-billion dollar value of them serves as a reliable barrier on the path of penetration into the industry. But even if there were funds to build a large number of giants, they would not be able to work profitably. After all, the market capacity is limited.

In the automotive industry in the USA in the 80s., For example, the minimum effective volume of production was 300 thousand cars per year. Since many enterprises produced at least two models at the same time, the cost of such a plant usually exceeded $ 3 billion. Such large investment Not available for all firms are available, therefore, objective prerequisites are created to preserve the leading position of car giants. It should be noted that if at the beginning of the 20th century the number of American automotive firms approached 200, then at the end of the 20s. Their number did not exceed 50, and now they can be counted on their fingers.

The effect of scale is an important, but not the only reason, since the level of concentration in many industries exceeds the optimal effective level. The oligopolistic concentration is generated by some other barriers to entering the industry. This may be associated with a patent monopoly, as it occurs in high-tech industries controlled by "Xerox", "Kodak", "IBM", etc. Throughout the term of the patent (in the US - 17 years old), the firm is reliably protected from internal Competition.

Among other reasons - a monopoly of control over rare sources of raw materials (for example, in the 60-70s business).

There are other barters, naturally established or artificially created. Barters are different in strength. Although there are no insurmountable barriers, they arise again and again.

The third characteristic feature of the oligopoly is universal interdependence. Oligopoly arises if the number of firms in the industry is so much of little that each of them in the formation of its economic Policy Forced to take into account the reaction from competitors. Just like the chess player should take into account the possible moves of the enemy, the oligopolyster should be ready for various (often alternative) options for the development of the market situation as a result of various behavior of competitors. With the monopolistic structure of such a provision, there are no competitors (there are no competitors), with perfect and monopolistic competition - also (competitors, on the contrary, too much, and take into account their actions are not possible).

Meanwhile, the reaction of competitors can be different, and it is difficult to predict it. Oligopolistic interdependence is the need to take into account the reaction of competitors to the actions of a large firm in the oligopolistic market.

Any model of oligopoly must proceed from accounting for competitors. This is an additional substantial limitation that must be taken into account when choosing a scheme of the behavior of an oligopolistic firm. Therefore, a standard model for determining the optimal volume of production and product prices for oligopoly does not exist.

It can be said that the definition of the price policy of the oligopolist is not only science, but also art. Here, the subjective qualities of the manager are played here, such as intuition, the ability to take non-standard solutions, to risk, courage, determination, etc.

There are reasons that explain the difficulties of using formal economic Analysis With the explanation of the price behavior of the oligopoly:

1) Oligopoly includes a variety of special market structures. There is a "tough" and "blurry" oligopoly. The "tough" oligopoly arises under domination of 3 - 4 enterprises throughout the market. "Blurry" is possible when 8 - 10 firms control 70 - 80% of the market. Many species and types of oligopoly makes it difficult to develop any simple market model, which will give a general explanation of the oligopolistic behavior in the field of pricing;

2) Universal interdependence and the inability to predict with confidence. The behavior of competitors complicates the situation in determining demand and utmost income, and this affects the establishment of price and production volume.

Despite these difficulties, two interrelated features of oligopolistic pricing appear. On the one hand, oligopolistic prices tend to be inflexible, i.e. "tough". On the other hand, when oligopolistic prices change, it is likely that enterprises change their prices together. Oligopolistic price behavior involves the presence of incentives and agreed actions, or a secret conspiracy when setting prices.

In terms of a high degree of uncertainty, oligopolists behave differently. Some are trying to ignore, compete and act, as if in the industry dominual perfect competition. Others, on the contrary, try to foresee the behavior of rivals and carefully follow each step. Finally, some of them consider the most advantageous secret conspiracy with opponents.

In real reality, all these three options for market behavior can be at the same time. Since the management of the company must constantly take many decisions, it is practically unable to predict the reaction of competitors to every effect. Therefore, in many tactical issues relating to secondary aspects, decisions are made quite independently. On the other hand, when developing strategic decisions, the firm is working to optimize relationships with rivals. The task of economic theory is to explore the rules of rational choice, attracting the apparatus of the theory of games. Each "player" is looking for such a move in order to maximize its benefit and at the same time limit the freedom of choice from a competitor. In search of the most "simple" way, the rivals can enter into a direct conspiracy, negotiating a single price policy, about the sale of sales markets, etc. The last case is most dangerous for society and, as a rule, is prohibited by the norms of antitrust laws.

Consider four different pricing models to reveal the essence of oligopoly:

1) pricing not based on a secret collusion: one of the enterprises changes the price, the investigation is a change in the demand for industry products (a broken demand curve);

2) pricing due to secret collusion - the trend towards maximizing the total profit of enterprises;

3) adaptation of prices to the prices of the dominant enterprise (silent secret agreement);

4) pricing on the principle of "costs plus".

Similar information.

When several companies dominate in the industries, such industries are called oligopolyor

Oligopolythey call the type of market, in which several firms control its bulk part. In this case, the differentiation of products can be both small (oil) and quite extensive (cars). The oligopoly is characterized by restrictions on the entry of new firms in the industry, which are associated with the effect of the scale, large costs for advertising, existing patents and licenses, the actions taken by competitors.

Characteristic signs of oligopoly:

1. A small number of major firms in the industry (Oligopolies may be homogeneous (oil, gas) and differentiated (cars)). With the characteristic domination of oligopolys, the rule apply for 4 leading firms in total manufacturing in the industry (if more than 60%, the industry is oligopolistic. Oligopolies usually exist in sectors producing technically complex products or goods produced in small quantities.

2. A characteristic feature of the oligopoly is the merger and conspiracy of firms. The motives of the association may be different: voluntary (monopolists), forced (a large firm forces small firm to merge to the merger of small), generally absorption (buying small firms that endure bankruptcy, etc.).

3. Unlike a pure monopoly in the condition of monopolistic competition (industry),each firm is forced to calculate response actions on their changes (the general interdependence of firms from few firms).

Specific traits:

1. several very large firms;

2. the product is standardized or differentiated;

3. the cost control limits interdependence;

4. the possibility of conspiracy about the price, market section, etc.;

5. there are obstacles to the branch of new firms;

6. independent competition;

7. demand and suggestions are slightly elastic.

Oligopoly exists when the number of firms in the industry is so small that each company in the formation of its pricing policy should take into account the reaction of competitors. Another feature of the oligopoly is the interdependence of solutions to firms at prices and the volume of production.

Types of oligopoly:

1. homogeneous (dense) -when firms produce identical products;

2. differentiated - When produce similar, but not the same products;

3. hard - when in the industry 3-4 firms;

4. blurry - when in the industry 6-7 firms;

5. based on a secret collusion;

6. not based on collusion -firms are not dependent, but the leader sets the parameters of the market;

7. based on merger association;

8. based on the production of technically complex goods, when there are few large firms in the industry, where positive effect scale production.

Types of relationships

At the concentration of sellers on the same market, the oligopoly is divided into dense and rare.

To dense oligopolyinclude those industry structureswhich are represented by 2-8 sellers on the market.

To discharged oligopoliespresent market structures that include more than 8 business entities.

Based on the nature of the products offered, the oligopoly can be divided into ordinary and differentiated.

Ordinary oligopolyrelated to the production and suggestion of standard products.

Differentiated oligopolyform based on the release of the products of a diverse assortment.

Total assessment Oligopolistic structures

Positive assessmentoligopolistic structures are associated primarily by the achievements of scientific and technological progress. Oligopolies possess huge financial resources, as well as noticeable influence of political and economic circles of society, allowing them to participate in implementation with one degree or another favorable projects and programs funded from public funds.

Oligopoly and its main models.

1. Surprise of oligopoly and her specific traits

2. The main indicators of the market concentration measurement (indexHerfindal - Hirschman)

3. Model Kourno (Dugolia)

4. High-grade based on a secret collusion

5. Voligopoly, not based on a secret collusion

6.Modes costs

1) Essence of oligopoly and its characteristic features

Oligopolythe type of market structure in which several firms and each of them are able to provide independent influence on the price.

Believe it:

Aluminum production;

Copper production;

Steel production;

Automotive industry;

Refrigerators, vacuum cleaners, etc.

Main features:

1) a small number of firms that dominate the market

2) Products may be homogeneous or differentiated

3) restrictions on access to the market of new companies (natural obstacles include: the effect of scale that can make non-profit coexistence of many firms on the market, since This requires large financial resources. We are talking about natural oligopoly. In addition, patenting and licensing production technologies. In addition, firms can take strategic actions that make it difficult to penetrate new firms into this market)

4) Each firm is able to influence the market price, but it depends on the nature of the interaction of firms. A significant impact on pricing has a secret collusion

5) Universal interdependence of firms (the oligopolyster must foresee the response of competitors to change its price strategy, given that competitors can predict the situation. All this is called oligopolistic interconnection.

2) the main indicators of the measurement of the concentration of the market (index Herfindal - Hirschman)

In practice, when one or another market structure is being studied, then use such a characteristic as its concentration. This is the degree of predominance in the market of one or several firms. There is an indicator reflecting this concentration. This is a concentration coefficient-percentive ratio of all sales for a certain number of firms. The most common is the "share of four firms": the volume of their sales is divided into sales of the entire industry. Maybe the "share of six firms", "share of eight firms", etc. But this indicator has a limit: does not take into account the difference between monopolies and oligopolys, because The coefficient will be the same where one firm dominates the market and, where 4 firms share the market. The disadvantage is overcome using the Herfinda index - Hirschman. It is calculated by building a market share of each firms and summarizing the results obtained.

H \u003d d 1 2 + d 2 2 + ... + d n 2, where

n-number of competing firms;

d 1, D 2 ... DN - share of firms in percent

With increasing concentration, the index increases. The maximum value is inherent in monopoly, where it is equal to 10,000. Consider what is the choice of the optimal production volume and price with oligopoly. So this is a choice that maximizes profits. Since the choice depends on the behavior of the firms, then there is no uniform model of the behavior of the company in the conditions of oligopoly. There are various models:

1) Corno Model

2) Model based on a secret collusion

3) model. not based on a secret conspiracy (prisoner)

4) silent conspiracy (leadership in general)

3) Model Kournot (Dugolia)

The model was presented in 1938 by the French economist Augustine Koro.

Dugolia - Private case of oligopoly when only two firms compete on each other on the market.

Firms produce a homogeneous product and a market demand market curve is known.

The volume of production of one firm A 1 varies depending on how, in the opinion of its leadership, A 2 will grow. As a result, each firm builds its reaction curve. She talks about how much a company will produce with the estimated volume of its competitor. In equilibrium, each company establishes the volume of production in accordance with its reaction curve, therefore the equilibrium of production is at the intersection of two curves of reactions. This is equilibrium-equilibrium Koro. Here, each dopolist establishes the volume of production that maximizes its profits under this volume of competitor production. This is the equilibrium an example of the fact that in the theory of games is called Nash's equilibrium, when each player playing poker makes the best that can be done with the specified actions of the opponent. As a result, no player has an incentive to change his behavior. This game theory was described by Neuman and Mongershtern in the work "Game theory and Economic Behavior" (1944).

4) Oligopoly based on a secret collusion.

Collusion-actual agreement between industry firms in order to establish fixed prices and production volumes.

In many industries, a secret conspiracy is considered illegal. The factors contributing to the secret collusion include:

a) availability of legal framework

b) high concentration of sellers

c) approximately the same average costs of companies in the industry

d) the impossibility of penetrating new firms to the market

It is assumed that, with a secret conspiracy, each company will equalize its prices when lowering and raising prices. At the same time, the firms produce homogeneous products and have the same average costs. Then, when choosing the optimal volume of production, maximizing profits, the oligopolist behaves like a pure monopolist.

If two firms have conspited, then they build contracts of contracts, which shows various combinations of the production of two firms that maximize profits. The secret conspiracy is much more profitable for firms, compared with perfect equilibrium and compared with the equilibrium KURNY, because They will produce less products by setting a more favorable price.

(Question 5) Oligopoly, not based on a secret collusion

If there is no secret conspiracy (inherent in the US), then the oligopolists are faced with the price dilemma prisoner. This classic example of the theory of games in the ecnomica.

Two prisoners accused of joint crime. They are sitting in different cameras and cannot support each other. If both confesses, the term of imprisonment for each will be 5 years. If not, then it's not done to the end and everyone will receive 2 years. If the first confesses, and the other is not, then the first will receive 1 year in prison, and the second 10 years.

There is a matrix of possible results:

Before prisoners, there is a dilemma: recognized or not in the commission of a crime. If they could agree, not to admit, they would receive for 2 years in prison. But if such an opportunity existed, they could not trust each other. If the first prisoner is not recognized, he risks that the other can take advantage of this. Therefore, in order not to make the first, it is more profitable to admit the second. Then it is more likely to admit both and go to prison for 5 years.

Oligopolists are also often encountered with the dilemma of the prisoner. Let there be two firms. They are the only sellers in the market of this product. Before them is a dilemma: high or low price install?

1) If both firms establish a high price, then will receive at 20 000000 rubles.

2) If they set a relatively low price, then will receive 15 000000 rubles.

3) If the first firm increases the price, and the second will lower, the first will receive 10,0000 rubles, and the second 30,0000 rubles due to the first one.

Conclusion: It is obvious that each company is beneficial to establish a relatively low price, regardless of how the competitor comes and receive 15,0000 rubles. The prisoner's dilemma explains the rigidity of the price at oligopoly.

(question 6) costs

The broken "demand curve" describes the behavior of the firm that does not conduct a secret conspiracy with competitors. The model is based on the fact that there are options for the behavior of market participants. When the price is changed, one of the competitors can choose one of the possible solutions:

1) level prices and adapt to a new price

2) Do not respond to change in price one of the competitors

3) Let one firm raises prices, then the rest will raise the prices after this company. Industries will lose some sales volumes, so if one company increases the price, others do not react to it.

4) Let one firm at the market reduced prices, then if competitors do not drop prices, the firm selects part of buyers. Therefore, if one firm will reduce prices, other firms also do.

Conclusion: Reduce prices following a decrease in competitor prices and not respond to an increase in prices the latter - the essence of the broken "demand curve" in the market of the oligopoly.

There is a broken demand curve in the oligopoly market.

P.-The set of products;

Q.- Number of products;

D.-demand;

P. about - Basic price in the market

If the firm and will raise the price above the existing base (P o), then the competitors will most likely be raised. As a result, the firm will lose part of its consumers. The demand for its products above the point is very elastic. If the firm d will lower the price, then competitors will also reduce the price. Therefore, at a price below P on demand less than elastic. The decline in prices by the company A can also cause price war when the firms are in turn reduce the price until for some of them such actions will lead to a loss and closure of production. Therefore, in the conditions of war, the strongest wins. But the policy is risky, therefore it is unknown, which of firms more "Boykaya".

Model "Costs +" The firms determines the level of costs per unit of production, and then adds the costs of the planned level of profit (approximately 10% -15%). The principle is used where the products are differentiated (for example in the automotive industry). The model shows that the firm does not adjust its costs under the market price. Such behavior of the firm is possible in the absence of a tangible pressure of competitors.

Oligopoly (from ancient Greek Liegptt - "small", and Rshchchech - "sell, trading") - type of market structure imperfect competitionIn which a limited number of large enterprises operate in the industry, and the entry into the industry is limited to high barriers. Oligopoly arises in sectors producing both standardized products (copper, aluminum, sugar) and differentiated goods (automotive, tobacco, liquor-vodka, brewing, etc.).

The first and main feature is the presence of a limited number of manufacturers in the market. Usually these companies produce a similar, but not the same product, have a large amount of production, and each of them controls a significant market share. Examples of oligopolies are manufacturers of non-ferrous metals, cars, tobacco products, etc.

Another characteristic feature of the oligopoly is a high degree of interdependence and coordination of actions, since the number of enterprises in the industry is so limited that each of them is forced to take into account the reaction of competitors into account. Firms who know that their actions will affect competitors in the industry, make decisions only after finding out the nature of the reaction of rivals.

The dependence of the behavior of each company from the reaction of competitors is called oligopolistic interconnection. But the oligopolistic relationship can lead not only to fierce confrontation, but also to the agreement. The latter occurs when the oligopolist firms see the possibilities of joint increase in their income by increasing the prices and conclusion of the market sharing agreement. If the agreement is open and decorated and involves all or most of the manufacturers in the market, its result is the formation of the cartel.

Oligopolistic firms use mainly methods of non-price competition. Oligopoly is one of the most common market structures in the modern economy. In most countries, almost all industrial industries (metallurgy, chemistry, automotive, electronics, shipbuilding and aircraft construction, etc.) have exactly such a structure.

Since the general model of oligopoly does not exist, the company of one industry can interact as monopolists, and how competitive firms. It all depends on the nature of the interaction of firms.

With the coordinated behavior of the company, the oligopolists take into account and coordinate market strategy and tactics by simulating pricing and competition strategy with each other (cooperative strategy), the price and supply will be to the monopoly, and the extreme form of such a strategy will be the cartel.

Uncomordinated behavior of firms, i.e. When firms follow a non-opoperative strategy, conduct an independent aimed at improving the status of a company, prices and strategies will approach competitive, can lead to an extreme form of such a manifestation - "price wars".

However, this behavior can not afford any firm. If the share of the company is a third of the market, the response response coordinated their actions to other firms will lead to its own extrusion from the industry.

Therefore, only the leading firm that controls more than half the market can be carried out this strategy. The relationship and coordination in oligopoly is very closely related to pricing policies.

Thus, characteristic features of oligopoly:

• 1) a limited number of firms;
• 2) high barriers to entry into the industry, limited access;
• 3) a significant concentration of production in individual firms;
• 4) Strategic behavior of firms, their interdependence.

Upon concentration of sellers on the same market, oligopoly is divided into dense and discharged. Tight oligopolys are conventionally related to such sectoral structures that are represented by 2--8 sellers in the market. Market structures that include more than 8 business objects include discharged oligopolies. This kind of gradation allows to evaluate the behavior of enterprises in a dense and discharged oligopoly.

In the first case, by virtue limited number Sellers are possible for various types of collusion in relation to their agreed behavior in the market, whereas in the second case, it is almost impossible.

Based on the nature of the proposed products, the oligopoly can be divided into ordinary and differentiated.

The ordinary oligopoly is associated with the production and suggestion of standard products. Many standard products are manufactured in oligopoly conditions - these are steel, non-ferrous metals, building materials.

Differentiated oligopolies are formed based on the release of the products of a diverse range. They are characteristic of those industries in which it is possible to diversify the production of the proposed products and services.

It is usually customary to say that "Big Two", "Big Troika", "Big Four", etc. dominates in oligopolistic industries. More than half of sales falls out of 2 to 10 firms. For example, in the United States, four companies account for 92% of all cars.

Also, the oligopoly is characteristic of many industries in Russia. So, cars are produced by five enterprises (VAZ, AZLK, GAZ, UAZ, IZHMASH). Dynamous steel produces three enterprises, 82% of tires for agricultural machinery - four, 92% of soda-soda-- three, all production of the magnetic tape focuses on two enterprises, automotive drivers - on three.

A sharp contrast to them is light and food industry. In these industries, the largest 8 firms account for no more than 10%. The state of the market in this area can be confidently characterized as a monopolistic competition, especially since the product differentiation in both industries is exceptionally large (for example, the variety of candy varieties that do not even produce the entire food industry, but only one of its sub-sectors is a confectionery industry).

But it is not always possible to judge the structure of the market based on indicators relating to the entire national economy. So, often, those or other firms belonging to the negligible share of the national market are oligopolists in the local market (for example, shops, restaurants).

If the consumer lives in a big city, it is unlikely to go to buy bread or milk to another end of the city. Located in the area of \u200b\u200bhis stay two bakers can be oligopolists.

Of course, the establishment of a quantitative boundary between oligopoly and monopolistic competition is largely conditional. After all, two named market types have other differences from each other. Products on the oligopolistic market can be both homogeneous, standardized (copper, zinc, steel) and differentiated (cars, household electrical appliances). The degree of differentiation affects the nature of competition.

For example, in Germany, automobile plants usually compete with each other in certain classes of cars (the number of competitors reaches nine). Russian auto plants practically do not compete with each other, since most of them are narrowly specialized and turn into monopolists.

An important condition affecting the nature of the individual markets is the height of barriers enclosing the industry (the value of the initial capital, control existing firms over new technology and the newest products With the help of patents and technical secrets, etc.).

The fact is that large firms in the industry can never be a lot. Already a multi-billion dollar value of their factories serves as a reliable barrier on the way of penetrating new companies in the industry. With the usual development of events, the company is consolidated gradually and by that time when an oligopoly is developing in the industry, the narrow circle of the largest firms is already actually defined. To invade it, it is necessary to immediately have such an amount that the oligopolists gradually invested in the case for decades. Therefore, the story knows only a very small number of cases, when a giant was created "from scratch" by disposable enormous investments (for example, Volkswagen in Germany, however, the state in this case was the state, i.e. in the formation of this company played a major role played non-economic factors).

The level of density of the oligopolistic structure of the market is measured by the number of enterprises in a particular sector and their shares in total sales of the industry within the framework of the national economy. Thus, by varying the number of enterprises, it is possible to determine the degree of production concentration, and, consequently, the proposals in the studied industry of social production.

At the same time, it should be emphasized that it would be imprudently focusing on the scale of only the national economy. Oligopolistic structures can be formed both at regional and at the local level of management. So, due to the specifics of the possibilities of consumption of finished concrete on local markets (district, a small town), oligopolistic structures are also formed, equally as on regional level In the sphere of offer, such as bricks.

However, one should not forget about two important points: intersectoral competition and product imports. Oligopoly strength decreases under the influence of product supply by enterprises of other industries, which have approximately the same with the products of oligopolists by consumer properties (for example, gas and electricity as a source of heat, copper and aluminum as raw materials for the manufacture of electrical conductors). The weakening of the oligopoly contributes to the import of similar goods or their substitutes. Both of these factors can contribute to the formation of more competitive structures compared with purely sectoral market structures.

oligopoly pricing model