Oligopoly is a form of market structure where there are only a few or a few manufacturers who sell products that are identical or similar to each other.
The main feature of oligopoly markets there are only a few companies in the market, such as the world oil market is filled by the middle eastern countries only, cellular telephone services market in Indonesia is only filled by Telkomsel, Indosat, Pro-XL, Axis, and Esia.
Due to the small players in this market, the most striking properties that arises is the strong attraction between the desire and interests of unilateral cooperation among the existing companies on the market. For example, Vodacom intends to work with Indosat in tariff setting in the daytime so that the price received by both parties could be higher than the price set by each company so that it could be higher profit-making. This desire may not appeal to Indosat Indosat feel better because it sets its own rates just because it can be more flexible in menetapkanya individually.
Another characteristic is the presence of price rigidity. Price rigidity occurs when a competitor lowers the price of its products. For example PT.Telkomsel lower the cost of SMS, from Rp.350 to Rp.150. This action will be followed by Indosat with helped reduce the cost of SMS. This is because indosat worry if it does not lower the cost of the same customers will move to Telkomsel. However, if the PT. Telkomsel raise the cost of Rp 350 to Rp 500 SMS Indosat will also raise the cost is not the same as hoping to get new customers who move from Telkomsel. So the price in the oligopoly market is tough to ride, but not tough to get off.
The next cirri is a cartel. In oligopoly markets it is possible to perform the cartel, which is two or more similar firms merge into one to form a monopoly. This will be explained further in the case of duopoly.
Oligopoli Market last characteristic is the existence of price leadership. Usually this happens if there is one big company to act as a leader and a follower of other small companies only.
Goodness Market Oligopoly
Goodness Oligopoly markets are as follows:
a. Efficiency. Sometimes it takes only a few companies on the market just so that other companies will only mempersengit persainan thus raising production costs. For example, in market there are only a boeing aircraft and water buses.
b. Because it is involved in the market only a few companies, if they brsaing would be more beneficial to consumers in terms of price and quality of the product because if one of these companies to raise prices, moved keperusahaan competitors direct their customers.
As for the ugliness of the Market Oligopoly is as follows:
a. It takes a great investment and capital to enter the market because of economies of scale that has been created by companies that are in the market so it is very difficult to enter the market.
b. In the market there may be a company that holds patents on a product that is not possible for other companies to manufacture the same product.
c. Some companies in the market may already have a loyal customer or customers that other companies it is difficult to rival companies.
d. Long-term existence of barriers such as granting a franchise by the government so that other companies can not enter the market.
e. The possibility of collusion (collusion) between firms in the market so as to form a monopoly and harm society.
