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Structures
ECO/365
October 19, 2015
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Market Structure
The market structure can be
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Oligopoly
Characteristics
find only a small number
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Oligopoly Characteristics
Oligopolies like to
maintain their
position of
dominance because
its too costly for
rivals to enter the
market.
Oligopolies (just like
monopolies) have
barriers to prevent
from anyone to
enter the market.
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Market Structure
Jacobs Engineering
Group is classified as a
technical service
industry.
The industry is mainly
dominated by a few
competitors.
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Competitive Strategies
In oligopoly, a price
competition can turn into
a price conflict reducing
profits. If one firm decides
to increase its price, the
other firms may not
follow and in turn the
other firms will gain the
customers. The firm that
raised prices will see a
drop in quantity
demanded, i.e. the
demand is more elastic
when the firm decides to
increase prices.
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Competitive Strategies
If a firms in an oligopoly
market structure decided
to drop their prices, the
other firms know that
they will lose a lot of
market shares if they
dont drop their prices, so
they drop their prices as
well. Because most
customers are
comfortable where they
are, the company that
dropped the prices in the
first place will see very
little increase in demand
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so the demand is
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Recommendations
Jacobs Engineering
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Recommendations
In the technical service
industry, Jacobs Engineering
Group is 2nd the leader when
it comes to its ranking.
Jacobs Engineering Group
was in line to collaborate with
a large Engineering, Design
and Construction firm URS.
The alliance would have
given Jacobs Engineering
Group the added value of
making it unique. AECOM
being a larger company
bought URS.
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Conclusion
Oligopoly is a common economic
system in todays society. The
technical service industry is a great
example of an oligopoly market
structure due to the small number of
firms, ability to set prices, barriers
that make it difficult to enter the
market and having either identical or
differentiated products.
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References
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