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An oligopolistic market is when the industry is dominated by a small number of large firms. There are high barriers to entry, usually differentiated products and also non-price competition. I will be investigating oligopolistic markets by looking at the groceries market, banks like Lloyds TSB and also the oil industry to see how accurate the oligopoly theory is. Tesco, Asda, Sainsbury’s and Morrisons dominate the groceries market in the UK with Tesco being the market leader. The top 4 take £66 out of £100 spent on groceries and their dominance has caused the OFT to investigate their profitability. The big 4 operate over 1,700 stores and have longer shopping hours, something that the smaller chains cannot afford to do. Now that Morrisons have taken over Safeway’s there is now an even bigger gap between the top 4 and the rest of the market but more competition between the top 4.The 5 firm concentration ratio is 64%. The groceries industry seems to be a good example of an oligopolistic market because most of the criteria in being on oligopoly are matched here. Many firms make up this industry like Netto, Lidl, Sommerfield but the top 4 dominate and set the prices, especially to the suppliers who are often sold short.
Approximate Word count = 823
Approximate Pages = 3.3
(250 words per page double spaced)
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