Market Structure Basics
What is a market structure?
How an industry is organized and how firms compete
What is an oligopoly?
A market with a small number of dominant firms
Is entry into an oligopoly easy or difficult?
Difficult
Name one oligopoly industry in Jamaica
Telecommunications / banking / petroleum
Who sets prices in an oligopoly?
No single firm; often a dominant firm (price leader)
Name one factor that influences market structure
Number of firms / product differentiation / barriers to entry / price control
How many firms dominate an oligopoly?
A few firms (usually 2–5)
What are barriers to entry?
Obstacles that make it hard for new firms to enter
Name one telecommunications company in Jamaica
Digicel or Flow
What is price leadership?
When one firm sets the price and others follow
What does product differentiation mean?
Whether products are identical or different
What does interdependence mean in an oligopoly?
Firms depend on and react to each other’s decisions
State one barrier to entry
High startup costs / brand loyalty / legal restrictions / technology
Name one bank in Jamaica
NCB / Scotiabank / JMMB
What happens if one firm lowers its price?
Other firms will likely match it
What does price control refer to?
The ability of firms to influence or set prices
What advantage do firms gain from economies of scale?
They can produce efficiently at lower cost
What type of costs make entry difficult in oligopolies?
High startup costs
Name one petroleum company in Jamaica
Rubis or TotalEnergies
What is the kinked demand curve?
A model showing firms avoid changing prices due to competitor reactions
List two factors that influence market structure
Any two: number of firms, product differentiation, barriers, price control
Why do oligopolies often have less competition?
Because only a few firms dominate the market
Is exit from an oligopoly easy or costly?
Costly
Why are these industries considered oligopolies?
Because a few firms dominate and entry is difficult
Why are prices “sticky” in an oligopoly?
Firms are reluctant to change prices because of competitors’ reactions