Inequality and Power: The Economics of Class by Schutz Eric A

Author:Schutz, Eric A. [Schutz, Eric A.]
Language: eng
Format: epub
Tags: Business
ISBN: 9780415554800
Google: aBYHQgAACAAJ
Amazon: 0415644542
Barnesnoble: 0415644542
Goodreads: 16053998
Publisher: Routledge
Published: 2011-04-05T07:36:25+00:00

Monopoly/oligopoly power

The textbook case of pure monopoly is merely the rare extreme case of a much more common situation widely found in market systems, in which a small number of firms control an entire market. Industries are easily listed in which a single firm unambiguously dominates as the universally recognized leader in pricing and investment among several or many considerably smaller firms. So too are oligopoly industries, in which a few firms share dominance, behaving in tacit or actual collusion in many respects as if they were one, even though they may rival each other in other respects.

Aside from the simple universal striving among all firms to achieve dominance over their rivals in market competition, the most important cause of market concentration is pervasive barriers to entry that limit the number of firms in most markets to something far short of the textbook case of competition, such as:

• scale economies that, in conjunction with transportation and communication costs, lead to concentration in a large or small region or locale;

• exclusive or privileged access to productive or other resources due to concentrated ownership;

• advertising and marketing barriers such as brand-recognition and customer loyalty;

• strategic actions of larger or otherwise advantaged firms to prevent entry by rivals, e.g., temporary price-cutting, strategic over-capacity, subsidiary cross-subsidization, product differentiation in market niches.

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