In this country we tend to fear the rise of Monopolies. Most Americans probably think our country does a good job at keeping them at bay. But what if the main heavy-hitters in our economy were oligopolies? Are we any better off?
The consumer may think that when they go to the grocery store or chose a cellphone plan they have many options to choose from. Though there may be many toothpaste brand names for instance, in actuality more than 80% of toothpaste brands are controlled by two companies: Procter & Gamble and Colgate-Palmolive Business Practice - Oligopoly. A monopoly is when a market is controlled by one firm who has unlimited market power. When a small number of firms control the market we call that an oligopoly and it is more common than we may think. The oligopoly firms are too few to create any sort of competition and they make parallel pricing and production decisions. If these few firms were under one company name we would call it a monopoly.
Cellphone service providers are another classic example Big Cellphone Companies. If you feel like you're getting ripped off by your cellphone provider you are probably right. There are four main companies, AT&T, Verizon, Sprint, and T-Mobil, with AT&T and Verizon controlling two-thirds of the market Big Cellphone Companies. Although some smaller companies attempt to make the market competitive often times they end up being bought out. For a long time T-Mobil has made the same type of market controlling decisions as the other cellphone companies, like high overage charges, binding contracts, etc, but now they are going out on their own. T-Mobil is attempting to move in on the market by making better decisions for the consumer. They will set themselves apart by ditching contracts and roaming charges Big Cellphone Companies. This makes them a target for acquisition but hopefully they can bring some competition to the market, a market that so many American's rely on.
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