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Publicēts: 19.02.2024.
Valoda: Angļu
Līmenis: Augstskolas
Literatūras saraksts: Nav
Atsauces: Ir
Laikposms: 2021. - 2025. g.
Darba fragmentsAizvērt

Microeconomics question: What about the market for gasoline? The good sold, say Octane 95 gasoline, comes very close to a good characterized by perfect competition but the companies selling gasoline/fuel do a lot to differentiate themselves. Your analysis may include the following:

Oligopoly best characterizes the gasoline market, because there is a very small number of firms and have maximum market share. This means that every firm is aware of the actions of other firm and decisions are easily made according to that. Prices of gasoline are connected to prices of the crude oil. Hence, these prices largely depend upon geopolitics (because oil can be found only in certain parts of the world) and the political relationship between major oil producing countries. this is the reason why political factors often can be seen to influence the prices of gasoline. Characteristics of gasoline market oligopoly include:
1. Dominating firms functions in accordance with each other to maintain output and pricing which results in their healthy balance sheets.
2. Significant obstacles to entry in the market due to high initial costs or limited resources. For instance, it is not easy to set up an operator firm to extract oil and gas.
3. The technology involved in production is stable. On the other hand, rapid innovation in technology encourages new entrants and price competition as firms with a technological and cost advantage will try to drive rivals out of business by lowering prices or by disrupting supply-demand chain. …

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