Ferg OL

respond to student response below in 150 words, ensure you use atleast 1 reference

question

One of the criticisms of oligopolies is the adverse impacts these firms have on income distribution. Do you believe that is a valid criticism? Discuss with appropriate examples

Student response

I do believe that oligopolies can negatively effect income distribution because they have less competition with other firms and customers are given limited choices for products or services.  Since these companies are in an oligopoly, their production and allocation methods tend to be inefficient and therefore allow them to place their products at artificially high prices despite the presence of other companies in the marketplace.  An example of an oligopoly in the auto industry is Ford, GMC, and Chrysler, while other firms in the industry such as the American Suzuki that went bankrupt or the failed Saturn brand demonstrates the difficulty in joining an efficient oligopoly cartel.  Another impact to income distribution is the difficulty oligopolies create when other firms attempt to enter the market and face barriers of entry.  This in turn causes major players to receive the maximum profit while small players receive very little profits.

Sonkushre, P. K.  (2018).  The Principle Advantages and Disadvantages of Oligopoly.  Retrieved from https://businesszeal.com/advantages-disadvantages-of-oligopoly

Investopedia.  (2018).  What Are Current Examples of Oligopolies?  Retrieved from https://www.investopedia.com/video/play/what-are-current-examples-oligopolies/