In the monopoly market, single seller enjoys all the favourable conditions, and decides market price in the absence of others. Whereas, in oligopoly market, there are more than two players enjoy all the available benefits and they collectively determine price of product. This is the difference between monopoly and oligopoly markets.
Monopoly vs duopoly vs oligopoly markets
If a company has all the favourable market conditions. It means that company enjoys all the benefits like government incentives, factors of production, and natural resources compare to others. In such situation, we used to say that the given company has monopoly over the market in terms of specific product.
Generally, it is called sellers monopoly and is an example of imperfect competitive market. Indian Railway, energy and electricity companies are the best examples of monopoly companies. Because, it is not possible to have perfect competitive market in terms of utility companies.
Duopoly market competition and examples
Duopoly market competition emerges when there are only two players dominate the given market in the absence of others. In the duopoly, only two players enjoy all the available incentives and benefits.
Alibaba vs Amazon, Flipkart vs Amazon, pepsi vs Coca-Cola, Swiggy vs Zomato, Ola vs Uber McDonald’s vs Burger King are the examples of duopoly in India and world. In the duopoly market, only two players dominate prices of product.
Oligopoly market competition and examples
On the other hand, if there are more than two companies enjoying all the favourable conditions or benefits, in the absence of competition from others, such market state is called oligopoly market.
Global vaccine market is dealing with oligopolies according to World Health Organization (WTO) . The vaccine companies are — Pifzer, Moderna, BioNtech, Astra Zeneca, and Serum Institute of India. These vaccine companies constitute more than 70 percent of global vaccine.
Monopolistic market competition vs perfectly competitive market difference
But, if there are many players competing with each other with products that are not completely identical, nor have perfect substitute, is known as monopolistic market.
And, if there are many companies which are selling identical product in the absence of government restrictions and incentives with similar level playing field, we call such market as perfect competitive.
In the every market competition, it is essential to know the condition regarding barriers to entry and exit. If there is no barriers to entry and exit, the given market qualifies to be called as perfectly competitive market.
Examples of monopolistic market and competitive market
Hotels, restaurants, grocery shops, clothing and footwear are the examples of monopolistic market competition. Agricultural markets, vegetable vendors, telecom companies, and currency market are examples of perfectly competitive market.
Oligopsony vs monopsony market difference
When it comes to buying commodity, the market is classified as oligopsony and monopsony. In the oligopsony market competition, there are only few buyers for the product despite there are many sellers.
Tobacco products companies are example of oligopsony as there are few buyers of tobacco but producers are many. This is an example of buyer’s oligopoly. Not complete but, it is also an example of imperfect competitive market.
And, in monopsony, there is only one buyers of the product. But the sellers of product may be few or many. In both situation, buyers are price makers as they determine the market price instead to accept market ruling price.
Weapon industries are examples of monopsony as there is single buyers of weapons of many companies. Simply, it is buyer’s monopoly and example of imperfect competitive market.
Price maker and price taker in the monopoly and oligopoly market competition
In the market, if the given player is willing to accept ruling market price, then, such player becomes price taker. Inversely, if the firm or company has ability to influence market price in his favour, such player qualifies to become price maker.
In the monopoly, duopoly, oligopoly, monopsony, oligopsony, market competitions, players act as price maker due to ability to influence market prices. On the other hand, in the perfectly competitive markets players hardly have ability to influence market prices, and accept the ruling price of market.
Price maker vs market power vs product monopoly cycle
Usually, a player become price maker if it has ability to influence market price of given product. Once it does so, either by the means of comparative advantage or favourable conditions, it starts capturing market share.
Eventually, With larger market share, player can easily influence market price in his favour. In this way, it becomes price maker. This is the beginning of monopoly market of given product.
Summary of difference between monopoly and oligopoly markets
Today’s global markets are characterized by various market competitions like monopoly, monopsony, oligopoly, oligopsony, duopoly, duopsony, monopolistic, competitive market and perfectly competitive markets.
Monopoly, oligopoly, and duopoly are called imperfect markets as there sellers enjoy favourable market conditions.
On the other hand, monopsony, oligopsony, and duopsony are also an examples of imperfect markets in which buyers enjoy favourable market conditions.
Perfectly competitive market is a market where every player sell and buy identical product. In such market, no one is price maker but price taker.
If the player is price maker, it has ability to influence market price. But, if it is price taker, it has no ability to influence market price but accept ruling price of market.
Finally, market power is equal to market share as the player with greater market share has ability to influence market price.
But, different types of market competitions depends on Factors responsible for rise of monopoly and competitive markets
Hence, every player wants to take comparative advantage to increase market share and power. This is all about the difference between monopoly and oligopoly markets competition.
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