What Is an Oligopoly?

Oligopoly means that the products of each company in a market are not unique and the number of competitors is limited. Its characteristics are: 1. Basically homogeneous products, such as basic chemicals or gasoline. 2. Relatively few sellers, such as some large companies and many small companies that follow large companies. 3. The demand curve of the obviously inelastic industry. Here, the competing companies carefully monitor each other's market prices. Each company must anticipate that raising its own price over the market price will not cause a large loss in sales, and if possible, competitors will follow the price increase. ^[1]

Oligopoly

Oligopoly: Also known as oligopoly, oligopoly, a market state where a few sellers (oligopoly) dominate the market. The word in English comes from the "few sellers" in Greek. Oligopoly is closer to both monopoly and competition

There are many theories and models for the behavior of oligarchs in the market, but compared with the other three market theories, the oligarch theory is much more complicated, and the specific performance is as follows: There are many types. There are a few pure oligopoly, two-head pure oligopoly, two-head heterogeneous oligopoly, etc. Behavior is diverse. The interdependence of oligarchs may be the independent behavior of mutual guessing, or it may be various forms of collusion and cooperation in different degrees. Different competition methods may be price competition or non-price competition.

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The market structure of oligopoly is a bit different

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The most prominent feature of oligopoly job hunting is that there is a strong interdependence or fierce confrontation between companies. Actually,

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The price in the oligopoly market is usually determined by the coordinated behavior of the oligopoly. This coordination can take many forms.

The price-leading system refers to the price of products in an industry, which is usually set first by a certain oligarch, and the rest of the oligarch follows to determine the price of their products.

The price leadership system usually has three forms: one is the dominant price leading, the second is the lowest cost leading price, and the third is the barometer leading price. Dominant price leadership means that the dominant manufacturers in the oligopoly industry establish the price of the product according to the principle of profit maximization, and the remaining smaller manufacturers determine their production and sales based on the established price. Lowest cost leading price means that the oligarch with the lowest cost determines its production and sales volume and sales price according to the principle of profit maximization, while other oligarchs will also sell their products at the same price. Barometer-type price leadership refers to the fact that in a oligopoly industry, a manufacturer has a recognized special ability in obtaining information and determining market trends. The change in the price of the product of the manufacturer plays a role in transmitting certain information, so other The manufacturer will change the price of its own product according to the change of the price of the product of the manufacturer.

Cost-plus method is the most commonly used pricing method in the oligopoly market. The main steps of this method are: first determine a normal or standard output number based on a certain percentage of the manufacturer's production capacity, and then calculate the corresponding average cost based on this output, thereby reducing the manufacturer's Prices are subject to frequent changes. A fixed percentage of the markup is then added to the estimated average cost to determine the selling price of the product.

Anti-monopoly Law of the People's Republic of China

The Anti-Monopoly Law of the People's Republic of China, known as the "Economic Constitution," came into effect on August 1. Although the "Antitrust Committee", which is the coordinating agency for organizing, coordinating and guiding antitrust work, has not yet been "listed", the pattern of antitrust responsibilities of the various departments of the "Troika" of the General Administration of Industry and Commerce, the Ministry of Commerce, and the Development and Reform Commission has been clearly established. The news from the above-mentioned departments shows that various departments are fiercely engaged, various law enforcement preparations are still in deep water, and relevant supporting regulations will be introduced one after another.

Society has high hopes for this law, and people are enthusiastic about the growth of China's competition system. Some people say that China's market competition has sprung up

Antitrust law

With the opening of the tangible market, the prelude to competition in the Chinese market seems to be quietly opened in the stalls of the market stalls. Some people say that in the transformation of society, the implementation of the "dual-track system" of prices has spawned the intangible market. The duality of transitional measures during the transition period, and the collision of competition and order, have promoted the growth of China's competition policy; others have said that China's competition laws and policies have grown up in tandem with market competition, and antitrust enforcement began with competition enforcement.

The "Interim Provisions on the Development and Protection of Socialist Competition" issued by the State Council in 1980 was the earliest regulatory document on antitrust in China. This regulation affirmed the important role of competition in modernization construction, and formally proposed anti-monopoly and unfair competition.

At the end of 1993, the "Anti-Unfair Competition Law" came into being, which is a basic law for China to maintain market competition order. Of the 11 types of unfair competition behaviors prescribed by them, 5 are restricted competition behaviors.

In order to enhance the operability of the "Anti-Law" and to better carry out anti-monopoly law enforcement work, the State Administration for Industry and Commerce, which assumes the task of anti-unfair competition law enforcement, has actively carried out the formulation of supporting regulations in accordance with the law. The antitrust supporting regulations previously formulated were "Several Provisions on Prohibiting Public Enterprises from Restricting Competition" and "Interim Provisions on Prohibiting Collusion in Bidding and Bidding." The supporting regulations of the new Anti-Monopoly Law are in progress.

Over the years, people's congresses in many places have formulated local anti-unfair competition regulations in accordance with the relevant provisions of the Anti-Unfair Competition Law and the actual conditions of market competition. Previously, more than 20 local legislatures with legislative powers have formulated the implementation regulations or measures of the Anti-Unfair Competition Law. These local regulations supplement antitrust laws and regulations, such as cartels that jointly manipulate markets.

In addition, the Price Law promulgated in 1997, the Tendering and Bidding Law promulgated in 1999, the Telecommunications Regulations promulgated in 2000, the Provisions on Prohibiting Regional Blockades in Market Economy Activities and the Promulgation in 2001, and Regulations such as the International Maritime Regulations and the Government Procurement Law promulgated in 2002 provide for varying degrees of restrictions on competition.

These evolving antitrust laws and regulations together constitute the basic framework of China's competition law, creating valuable experience for the advent of today's Antitrust Law and laying an important foundation for the implementation of the Antitrust Law.