Oligopoly market, also known as oligopoly market, refers to a market organization in which a few manufacturers control the production and sales of products in the whole market. Oligopoly market is considered as a common market organization, and many industries in western countries show the characteristics of oligopoly. For example, the automobile industry, electrical equipment industry and canned food industry in the United States are all controlled by several enterprises.
The main reasons for the formation of oligopoly market are as follows: the production of certain products must be carried out on a considerable production scale in order to obtain the best economic benefits; Several enterprises in the industry control the supply of basic production resources needed for production; Government support and so on. It can be seen that the causes of oligopoly world bank and monopoly market are very similar, but the degree is different. Oligopoly market is a kind of market organization close to monopoly market.
Oligopoly industries can be classified in different ways. According to the product characteristics, it can be divided into pure oligopoly industries and different oligopoly industries. According to the behavior of manufacturers, it can also be divided into collusion (that is, cooperation) and independent action (that is, non-cooperation).
The price and output decision of oligopoly manufacturers is a very complicated problem. The main reason is that in the oligopoly market, the output of each oligarch accounts for a large share of the total output of the whole industry, so the change of output and price of each manufacturer will have a decisive impact on the output and price of other competitors and even the whole industry. Therefore, before taking action, each oligopoly manufacturer must first speculate or master the impact of this action on other manufacturers and the possible reactions of other manufacturers. After considering these factors, the most favorable action can be taken. Therefore, the profit of each oligopoly manufacturer is influenced by the decisions of all manufacturers in the industry. Generally speaking, it is impossible to establish a model of oligopoly manufacturers without knowing the reaction mode of competitors. In other words, there are as many models of oligopoly manufacturers as there are assumptions about the way competitors react, and how many different results can be obtained. Therefore, in western economics, no oligopoly market model can make a general theoretical summary of the price and output decision of oligopoly market.
Classical oligopoly models include Cournot model and Siweiqi model, both of which belong to oligopoly manufacturer model under the condition of independent action.
Game theory has played an important role in the analysis of oligopoly theory.