Oligopoly Market Structure (Essay Sample)

Oligopoly Market Structure Name of Author Institutional Affiliation Course Instructor Date Oligopoly Market Structure The U.S. automobile industry fits the oligopoly market structure. This critical sector of the economy is characterized by a few major players, such as General Motors, Stellantis, and Ford. These three firms produce automobiles ranging from trucks to cars to SUVs. Due to the intense competition between the three major layers, the producers are determined to restrict output and, in other cases, fix prices in order to achieve above-market returns. Number of Firms In an oligopoly market structure, only a few firms dominate the market (Basiri et al., 2024). In the US automobile industry, only three firms are the major players. Even though there are other firms operating in the US automobile industry, such as Honda, Toyota, and Tesla, they do not hold significant shares like the three major players. Type of Product In an oligopolistic market structure, the products offered by the firms are either homogenous or differentiated (Basiri et al., 2024). The products offered by the major players in the US automobile industry have a high degree of product differentiation. Every firm offers a wide range of vehicles with different designs and features, depending on their target market. General Motors, for instance, focuses on luxury and performance, while Ford is more concerned on high durability, and Stellantis on high performance and affordability, such as Jeep. Entry and exit barriers Oligopoly market structures are characterized by high entry barriers, as is the case with the US automobile industry. The high capital investment and heavy regulation make it close to impossible for other firms to enter the market. In con...