How to Compare and Contrast an Oligopoly and a Monopoly
Compare and contrast essay structures are fairly easy to write or discuss. The structure for this particular topic is fairly easy to manage as you are comparing and contrasting two clear ideas; an oligopoly and a monopoly. Each paragraph section of your discussion should include one concept from each power structure that you can discuss. What you are looking for in each section is the similarities and differences between the two. You do not have to say that one is superior to the other, just that they are different and both have advantages or disadvantages.
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Instructions
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Define Terms
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Define the meaning of oligopoly clearly. Oligopoly means that the market is dominated by a few large suppliers or companies.
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Define monopoly in a simple and clear way; for instance: a monopoly means that one supplier or company is the only supplier of a product or with few, if any, close substitutes and, therefore, dominates market forces. There are not many monopolies in the United States, according to Forbes.com, so monopolies are often defined as having "dominant market share."
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Complete the first paragraph of your piece by briefly giving examples of an oligopoly and a monopoly. An oligopoly has two or more sellers, whereas a monopoly has a single seller. A good example of an oligopolistic industries include banking, computers, petroleum and automobiles. Among companies that fit that description are Microsoft, Whirlpool, Campbell Soup and Boeing.
Compare and Contrast
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State the differences between an oligopoly and a monopoly. This gives you a chance to investigate how the two power structures work in our society.
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Explain that a oligopoly means that a few firms are dominating the market, this in turn means that there is a lack of price competition that directly affects the consumer as it creates less choice in terms of pricing. In an oligopoly, if one firm cuts prices, then the other firms are forced to do the same to avoid losing their share of the market.
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Compare this to a monopoly and there is a similar problem: one company dominates and controls the pricing of a product. Using Microsoft again as an example, the price of the product is fixed, consumers need the product and there are few alternatives. The monopoly can change prices whenever it wants to as there is a demand for the product and the competition is too weak to make a significant impact on the company's pricing policy.
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Contrast the inter-dependence of an oligopoly with the power structure of a monopoly. For instance, an oligopoly has no alternative but to be interdependant: If Coke drops its prices, then Pepsi will have no choice but to do the same to retain its share of the market. If it does not change its prices, another firm may offer a cheaper alternative and take its place. An oligopoly is a balancing act to retain power and dominance.
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Look closely at a monopoly and you will see that the dominance of that company means that it has much more freedom in how it acts. The advantage of being a monopoly is that it can invest in its own product to continually improve and update itself to retain its market dominance. The disadvantage is that it can change prices at will and hamper consumer choice.
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Tips & Warnings
Ensure that you give equal weight to both sides of the equation and use good references.
References
- Photo Credit writing image by Alison Bowden from Fotolia.com
