BUSINESS ECONOMICS
DIGITAL ASSIGNMENT 3
Differentiate between monopolistic and oligopolistic market structure with
appropriate examples?
S. BASIS MOPOLISTIC COMPETITION
N COMPETITION
O
1. No of firms The number of firms selling
similar product is fairly large but
not very large as in perfect
competition, each supplying a
small percentage of total supply of
the product. As a result, firms are
in position to influence the price
of their product due to their brand
names.
EX: Among toothpastes of
different brands, Colgate sells at a
higher price.
2. Nature of Products are not homogeneous
,they can differentiated on basis of
product
brand name , quantity ,quality
,type of service , workmanship ,
etc.
EX: soaps like lux , hamam ,
medimix , lifebuoy ,rexona ,etc
belong to this category.
OLIGOPOLISTIC
There are few big firms
controlling the market where each
firm produces a substantial part of
output of the industry. The
implication of number of firms
being so small is that it gives
individual seller the power to
influence the price by his own
output and that he can provoke
rival firms to react.
EX: Firms in car industry ,can
provoke rival firms to react .
Products are both homogeneous (
like steel and fertilizers) and
differentiated9like cars and
scooters)..When oligopoly firms
produce homogeneous product , it
is called perfect oligopoly. When
oligopoly firms produce
differentiated products , it is called
imperfect oligopoly.
3. Barriers to No barriers to entry ,New firm can
entry of enter the market if found
firm profitable. Similarly , inefficient
firms already operating in the
market are free quit if they incur
losses. Hence , there is no
abnormal profit in long run.
Entry of new firms is difficult.
There are barriers in the form of
large capital , patent rights ,
critical raw materials , etc. which
allow limited number of firms in
oligopoly. Hence , there is
abnormal profit in long run.

4. Selling Selling costs are made in terms of Heavy selling costs and
costs advertisement through newspapers advertisement costs than
, Tv , radio , free samples , etc to monopolistic firms are incurred
promote a brand to promote sales.

5. Demand
curve.
6. Control Seller can influence the price of
over price the commodity to some extent
depending upon (1) the degree of
consumer’s preference for brand
name of his differentiated product
and (2) extent of competition
from close substitute of his
product.
7 Examples Clothing , consumer financial
services , professional services ,
restaurants.
REG NO : 19BCC0020
NAME :S.JAYAGOKUL.
There is price rigidity in oligopoly
which means that price remains
unchanged irrespective of change
in demand or supply and stick to
ongoing price of the product so as
to avoid any sort of price war.
Automobiles , aluminum , soft
drinks , investment banking , long
distance telephone service ,
pharmaceuticals.