While Southwest Airlines is the world’s largest low-cost carrier, with over $21 billion in annual revenue, United Airlines operates a large domestic and international route network spanning six continents. As of 2018, there were 58 airlines in the US, out of which 17 were classified as major carriers with more than $1 billion in annual revenue. However, nearly 55% of the US airline revenue comes from the top 4 airlines.

Customers don’t have alternatives that they could use instead, which requires them to make a purchase from one of the companies in the oligopoly. The largest of them is Service Corporation International, with nearly 11% market share by the number of funeral homes and 16% market share by revenue. Interdependence means that actions of one firm affect the actions of other firms. A firm considers the action and reaction of the rival firms while determining its price and output levels. A change in output or price by one firm evokes reaction from other firms operating in the market.

Industries With Potential Oligopolies

Here the entry of new or other industries into the market is strictly banned. Combined, these airlines fly just over 65% of all domestic passengers. The next single carrier that flies the largest share of passengers, Alaska Airlines, flies just over 6% of all domestic passengers in the United States.

But today, when globalization is at its peak, oligopoly is emerging as the leading market strategy. While the governments of a few countries are promoting it, others are banning it. Pharmaceuticals never cross our minds as an oligopoly because of the sheer number of brands and types of medicines available in the market. However, only large brands benefit in this industry, and for two reasons, the first one being the requirement of research and development in this field. Medical science continues to advance rapidly, and new medicines are developed constantly. The second reason for the oligopoly in pharmaceuticals is patenting.

Due to which they create invariable competition for one another. Collusive oligopoly is basically a cooperative market strategy. It occurs when few firms collaborate to an understanding in reference to the price and results of the products.

Fixing of products price:

In oligopolistic industries the process is generally a blend of monopolistic and competitive tendencies. Oligopolies can be followed in several industries such as steel, aluminum and automobile industries. The price change of each producer affects the actions of other producers. For instance, a reduction in the price of one producer may lead to an equal deduction by the other producers. Unlike a monopoly, where a single corporation dominates a certain market, an oligopoly consists of a select few companies.

Understanding Oligopolies

We will read about the definition of an oligopoly market, its characteristics and consider a few real-life examples. Oligopolies tend to arise in an industry that has a small number of influential players, none of which can effectively push out the others. These industries tend to be capital-intensive and have several other barriers to entry such as regulation and intellectual property protections. In August 2024, a federal judge ruled that Google, owned by parent company Alphabet Inc. (GOOG), engaged in illegal practices to maintain a monopoly over online search. Though the ruling didn’t contain remedies or a decision to break up Google, it was widely seen as a major moved toward breaking up or limiting the power of big tech firms through antitrust action. For example, if an airline cuts ticket prices, other players typically follow suit.

In contrast, a monopoly occurs when a single company provides goods with no direct competitors. The same is the case for an operating system for smartphones where the majority market share is captured by Android & iOS. These companies are coexisting without creating a threat to others. In the current scenario, the number of these players is increasing. These are prevalent and that too within the wide cross-section of industries.

It alleges that Facebook buys out rivals to curb competition and kills start-ups that it cannot buy by limiting access to its tools. Being a dominant social media player, Facebook’s failure to curb fake news and hateful content have also invited a lot of criticism across the globe as well as in India. Much has also been said about Gautam Adani and his turn of fortune since 2014.

Identical or differentiated products

1. As the standards and prices here are maintained by a generated authority.
2. You can yourself check that the prime time for every channel is different.
3. The strategy was that General Motors would announce a price rise less than that of Chrysler.
4. When we look at the overall prime time programming and content selection, we will observe that there is also considerable unity.

Though independent production companies and local movie theatres exist, the larger corporations dominate the industry and set the standard for everything from how actors are paid to how movies are distributed. A monopoly is one firm holding concentrated market power, a duopoly consists of two firms, and an oligopoly is two or more firms. Oligopolies can be created through coordination between companies.

Aviation is a unique type of oligopoly because unlike other industries, that have an oligopoly on a global level, air travel only functions as an oligopoly within a nation. For instance, among 58 airlines in the United States, only four of these dominate the sector by 55% market share. These companies are American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines.

In a non-collusive Oligopoly, there are only a few large firms. When one firm raises its price, other firms maintain their price oligopoly examples in india level. As such, consumers buy goods from other firms at a lower price.

But neither of these three companies leads in shareholder returns delivered by top cement manufacturers. That mantle goes to Shree Cement, the largest cement manufacturer in north India, whose stock price has grown at a CAGR of 38% during this period, though amid very thin trading volumes. On a standalone basis, Shree has the second-largest capacity, at 43 million tonnes. In the past decade, it has expanded its capacity three-fold, primarily in the north and east.

Subaru Corporation, which owns the Subaru brand, is an independent automaker. However, the company collaborates with major auto manufacturer Toyota on several models, such as the BRZ and the Solterra (which is built in a Toyota factory). Toyota also has a stake in the Subaru Corporation, further creating overlap between the interests of the two companies. While these companies are still technically considered competitors within their particular market, they also tend to cooperate or coordinate with each other to benefit the group as a whole. For example, instead of competing to attract customers by lowering prices or offering better contracts, they may all use similar contracts or keep prices around the same level.