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Monopoly vs Oligopoly

Monopoly VS Oligopoly

Differences Between Monopoly and Oligopoly

  • Monopoly is a marketplace where there is a single seller of goods or services and he is the only price determinant in the market. The seller is the only provider of goods or services in that market. The seller has the power to influence the price of the goods and there are a lot of buyers in the market of that good.
  • Oligopoly, on the other hand, can be defined as the market structure where there are few sellers in the market more than one and may be less than ten selling products of the same category with not much of the differentiation. The differentiation is only pertaining to the make of the product or the packaging of the product. In this type of market, there is intense competition among the players and the buyers have the choice to choose the identical alternative of the product among the available ones of the market.

Monopoly vs Oligopoly Infographic

Here we provide you with the top 7 difference between Monopoly vs Oligopoly

Monopoly-vs-oligopoly

Monopoly vs Oligopoly Key Differences

The key difference between Monopoly vs Oligopoly are as follows –

  • In monopoly is there is a single seller of good in the market and in oligopoly, there are few sellers in the market
  • In a monopoly, there is no competition among the sellers as they are only one in the market whereas in oligopoly there are few sellers in the market and it is intense or fear competition among the sellers
  • In oligopoly, the customer has various choices among the products and are mainly driven by the price, customer taste and preference and brand loyalty whereas in monopoly the customer has no choice or alternative to pick among the goods
  • In an oligopoly, the demand curve of the market it called a kinked demand curve whereas in monopoly the demand curve is downward sloping

oligopoly

  • In the long-run in oligopoly market structure the seller ends up making the normal profit in the industry as any change in the price will be counter set by the subsequent fall in the price of the rival firm. Whereas, in the case of monopoly in the long-run there is a possibility that the seller can earn abnormal profits
  • The price set by the monopoly is generally controlled or monitored by the government to protect the interest of the customers, for example, electricity is an example of monopoly market where it is only one producer of the goods. On the other hand, oligopoly is driven by private players in the market. For example, a brand of toothpaste has many closely related substitutes which an example of oligopoly market.

Monopoly vs Oligopoly Head to Head Comparison

Let’s now look at the head to head difference between Monopoly vs Oligopoly

Monopoly Oligopoly
A market structure where the market is dominated by a single seller of the goods and the services A market structure where there are numerous sellers in the market selling close substitute of the goods. The market is generally dominated by large industry
The price is controlled by the seller since there is no competition in the market The price is determined by the competition in the market whereas the price is determined by keeping in mind the actions of the competitor firm
In this market structure is a high barrier to entry and exit in the market as the industry is generally capital intensive and is difficult to enter. There are also economical institutional or legal restriction of this kind of industry In this market structure, the barrier of entry is generally high because of economies of scale in the industry
A firm is a price maker A firm is a price taker
Kinked Demand curve The downward sloping demand curve
Electricity, Railways, water diamonds are examples of the monopoly market FMCG, automobile are the examples of oligopoly industry
No competition exists as there is a single seller of the goods Intense or high competition exists among the sellers

Recommended Articles

This has been a guide to Monopoly vs Oligopoly. Here we discuss the top differences between Monopoly and Oligopoly along with infographics and comparison table. You may also have a look at the following articles –

  • Perfect Competition vs Monopolistic Competition
  • Foreign Direct Investment Meaning
  • Microeconomics vs Macroeconomics Differences
  • Elastic vs Inelastic Demand Differences

The post Monopoly vs Oligopoly appeared first on Learn Investment Banking: Financial Modeling Training Courses Online.



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