Oligopolies UPSC NOTE

 Why in news

Countries’ energy transition efforts face significant uncertainty due to the oligopolistic control over mining and processing of rare earth elements.

Urges investors in green transitions to abjure greed.

Oligopolistic market

  • Oligopolistic markets are often found in industries where the barriers to entry are high.

  • Examples the automobile industry, the oil industry, and the pharmaceutical industry.

There are a number of different types of oligopolistic markets. 

  • One common type is called a collusive oligopoly

  • In a collusive oligopoly, the firms in the market collude, or agree, to set a price and output level that is beneficial to all of them. 

  • This is often done through a cartel, which is a formal agreement between the firms in the market.

  • Another type of oligopoly is called a non-collusive oligopoly. 

  • In a non-collusive oligopoly, the firms in the market do not collude. 

  • Instead, they compete with each other in a variety of ways, such as by offering different prices, products, or different levels of quality.

Oligopolistic markets can have a number of positive and negative effects. 

  • On the positive side, oligopolistic markets can lead to lower prices and higher quality products than other types of market structures. 

  • This is because the firms in the market have an incentive to compete with each other to attract customers.

  • On the negative side, oligopolistic markets can lead to higher prices and lower output than other types of market structures. 

  • This is because the firms in the market have the ability to restrict output and raise prices

  • Oligopolistic markets can lead to innovation being stifled, as the firms in the market may be hesitant to invest in new products or processes if they believe that their competitors will simply copy them.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Oligopolies UPSC NOTE
Oligopolies UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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