Benefits/merits/Advantages (Merits) of Oligopoly
- There is competition and leads to the production of high quality production. This enhances the standards of living of the consumers.
- There is existence of price stability under oligopoly. This is due to price rigidity determined at the kink of the demand curve. This helps to reduce price fluctuations and consumer exploitation in the market.
- Ability to carry out research. Oligopolistic firms are able to carry out research and improve on their techniques production. This is because they earn abnormal profits both in the short and long run.
- Firms under oligopoly can offer after sales services to their customers. For example transportation, repairs of machinery, gifts, guarantees etc. This increases on their customers’ satisfaction.
- Consumers have a wide choice due to the production of differentiated products under differentiated oligopoly. This helps to cater for the different tastes and preferences of different consumers.
- Firms enjoy economies of large scale due to their large scale nature of operation e.g. in terms of transport, storage, management etc.
- It leads to development of social and economic infrastructure. This is as a result of large investments established in the economy.
- They provide employment opportunities to the people. This helps to improve on their incomes and standard of living.
- There is efficiency in production. This is because firms are involved in competition and therefore there is no wastage of resources.
CATEGORIES Economics
TAGS Dr. Bbosa Science
