Economics Coursework Example | Topics and Well Written Essays - 1000 words

Economics - Coursework Example ‘Much of the competition between these oligopolistic firms is usually in terms of marketing of their particular brand’ (Sloman, pp. 197-198 2008), although the marketing techniques may differ considerably from one industry to another. There is a huge deal of interdependence between firms in an oligopoly. The abstract tells us that they have power in many ways in terms of regulating prices and agreements. The decisions made by the rivals will affect each firm. Firms, hence affecting their decisions recognize this interdependence (Sloman, pp. 197-198 2008). 2) Explain two reasons for your answer in question 1? It is an understanding that the type of the market structure is oligopolistic because of the fact that a few numbers of firms have a larger share of the market. In addition, when there are collusions as in the above case, so it shows that the type of market structure is oligopolistic. In addition, all the six companies mentioned do not always compete aggressively (Bi anco, 2011). It has been an observation that the companies have merged/collusion, which is done only in cases of an oligopoly where there are a few number of firms and they have a considerable, share in the market. It shows that ‘the policies of each company greatly influence those of the other firms, because of the few sellers present’ (World Book, Inc, pp. 735, 2007). 3) What are the 6 Firm concentration ratios for the global pesticide industry? The global pesticide industry (Swanson, pp. 52-59, 2002) is expected to have a larger ratio in the market because there are these 6 large firms only which have an edge over the market. It is expected that they will have a monopoly due the collusions that have taken place. This will result in an extensive market share (Leiberman, pp. 23-25, 2007). 4) What is meant by a cartel? Cartel is a form of collusion. There are other type of collusions like the horizontal and the vertical collusion, and the joint product development (Worl d Book, Inc, pp. 251, 2007). It is an association that is formed by various producers of a particular industry to control the market for their product. By restricting the available supply, the selling price is usually raised in a cartel. Usually, a cartel consists of privately owned companies in one country or another. Some governments may also form a cartel. In order to succeed, a cartel should be having a few members. However, the cartel must include all or most of the producers in a country to have monopoly in the product. It is necessary for the product to have less substitutes and it is favorable of the product is scarce (World Book, Inc, pp. 240-242, 2007). Like the case of chemical industry in an agriculture market. In a cartel, the selling price of a product is usually set at a higher price. In order to obtain this higher price, the cartel limits the output that is expected of each member, hence assigning each member a share of the market. There is a high probability for the cartel to fail if a large number of members cheat on these arrangements (World Book, Inc, pp. 252, 2007). 5) Give two features of the collusions by the companies There are explicit collusions and tacit collusions. In explicit collusion, it is the easiest way for firms to ensure that all the profit maximizing output will be in maintenance. Such