Concentrated Markets

Monopoly

This is where there is a single producer in the market. Features:

• One producer is able to charge relatively high prices
• New products are rarely introduced
• Resources are not used efficiently
• Monopolies have market power
• Monopolies are able to set prices – price setters

Oligopolies

Few firms in the market who are interdependent in their actions. Firms consider competitors reactions when changing prices / introducing new products.

• There is a high degree of competition
• Businesses try and avoid price competition preferring non price competition
• Products are branded and differentiated from each other
• Can be many take-overs
• Collusion may occur leading to cartels being formed