Identify and describe a real world example of an oligopoly

Identify and describe a real world example of an oligopoly

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Identify and describe a real world example of an oligopoly. What characteristics of this market fit the definition of an oligopoly? What role does advertising play in this market? Is this consistent with what you’ve learned about advertising and oligopoly in this course?

A great real world example of an oligopoly is the technology/Cell phone industry. Competing companies like Samsung, Apple, and Google, tend to rule the market. The top spot in their industry is revolving and they are all competing for it. “An oligopoly is Situation in which a market is dominated by a few firms, each of which recognizes that its own actions will produce a response from its rivals and that those responses will affect it” (Principles of Microeconomics, 283). Each company is in competition with each other and currently it seems to be cell phone leak season, the most recent Pixel from Google soon the next three companies will slowly leak or announce their new products. The galaxy S8 and the IPhone8 are the newest ones to be released. The key is that they all tend to have a new device entering the market either one right after the other or at the same time. As the products come to market the consumers have to choose either to brand loyalty or switch to the other side or stay with the least expensive option.

“Firms in monopoly, monopolistic competition, and oligopoly use advertising when they expect it to increase their profits (Principles of Microeconomics, 290). In this oligopoly advertising, does not play a major role in this perfectly competitive market. “everyone knows that firms in each industry produce identical products, and buyers have complete information about the alternatives available to them in the market” (Principles of Microeconomics, 290).

This is consistent with what we’ve learned about oligopoly and advertising. “Advertising creates consumer loyalty to a particular brand, then that loyalty may serve as a barrier to entry to other firms” (Principles of Microeconomics, 291).

Rittenberg&Tregarthen. (2012). Principles of Microeconomics

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