Monopoly markets are dominated by a single seller and he has the ultimate power to control the market prices and decisions and in this type of market, customers too have limited choices whereas, in oligopoly markets, there are multiple sellers and there is a huge and never-ending competition amongst them for standing out amongst the others in the same.
Differences Between Monopoly and Oligopoly
- A Monopoly is a marketplace where there is a single seller of goods or services and he is the only price determinant in the marketDeterminant In The MarketDemand is an economic principle that explains the relationship between prices and customer behaviour as a result of price changes for products and services. Many elements in the economy influence demand for goods and services; these elements are known as determinants of demand, and they include the price of commodities, the price of substitutes, buyer's taste, and changes in buyer's income.. 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 maybe 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
Key Differences Between Monopoly and Oligopoly
- In a monopoly 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 an oligopoly, the customer has various choices among the products and is 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 curveDemand CurveDemand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. That means higher the price, lower the demand. It determines the law of demand i.e. as the price increases, demand decreases keeping all other things equal. of the market it called a kinked demand curve whereas in monopoly the demand curve is downward sloping.
- In the long-run in an 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 a monopoly marketExample Of A Monopoly MarketMonopoly is the “one-&-only” seller of a good or service in the market & it faces no competition from any other entity. Generally, it is controlled or monitored by the Government to safeguard the customers’ interests. 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 an oligopoly market.
|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 intensiveCapital IntensiveCapital intensive refers to those industries or companies that require significant upfront capital investments in machinery, plant & equipment to produce goods or services in high volumes and maintain higher levels of profit margins and return on investments. Examples include oil & gas, automobiles, real estate, metals & mining. 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 takerPrice TakerA price taker is an individual or firm with no control over the prices of goods or services sold because they usually have small transaction sizes and trade at prevailing market prices. Individual investors act as price takers in the stock market.|
|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|
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 –