How to be a Successful Oligopolistic Firm in the Long Run :: essays papers

How to be a Successful Oligopolistic Firm in the Long RunIt is a well-known(a) fact that every fast wants to be successful in its business. sometimes it is difficult to decide what kind of actions to take in order to get through it. Especially, it is hard on oligopoly securities industry because this is one of the most complicated market structures. Oligopoly includes m either models and theories such as duopoly where are just two producers and which price decisions remind monopoly, kinked demand curve, which decreases economic lettuce, and cartel, which brings economic profit just for the short-run. However, to be a successful oligopolistic firm in the long run, managers should include in the planning process such economic theories and models as producer interdependence, the captives dilemma, price leadership, nonprice adjustments, and correct utilise of barriers to entry.The essential work out of an oligopolistic firm is interdependence. Oligopoly involves few producers, w hich means more than one producer as it is in pure monopoly but not so many as in monopolistic competition or pure competition where it is difficult to chase rival firms actions. Therefore, due to small number of producers on oligopoly market, the price and getup solutions are interdependent. As a result, firms can uphold or occur to an agreement profitable for everyone. Therefore, they can increase, as it is possible, their joint profits (Pleeter & Way, 1990, p.129). Further, oligopoly is divided up on pure, which is producing homogeneous products, and diametriciated, producing heterogeneous products (Gallaway, 2000). Economists Farris and Happel insist that the more the product is differentiated, the more firms become independent, and the more the product differentiation, the less likely joint profit maximization exists for the entire group (1987, p. 263). Consequently, it is worth to be interdependent. Another factor on the way to success on oligopoly market is understandi ng and using with advantage the game theory, in particular, prisoners dilemma. Game theory, a mathematical approach to strategic behavior, was stated by John von von Neumann and Oscar Morgenstern in 1944 (Farris & Happel, 1987, p. 267). Game theory is useful in analyzing the actions in any strategic situation, from a game of chess to the pricing and output decisions of oligopoly firms where firms cooperate or conflict. The classic game is the prisoners dilemma poem are years in prison for each arrested player considering different behaviors of each prisoner.