Case Study General Motors Oligopoly

1167 Words 5 Pages
My company selection is General Motors which comes under automobile industry. With respect to market structure, a consumer goods industry such as automobile industry is differentiated oligopolies. Oligopolies are more than one player similar to monopolies have just very few players in this auto industry co-operate to the monopoly level.
Market structure that best characterizes the company you are evaluating
When there are only few large competitors exists and each competitor is sensitive to the price, advertised decision, then market situation is called oligopoly. Auto industry in the U.S is oligopoly because there are only few large manufacturing companies producing a limited differentiated automobile product that controls the entire U.S market. These few automobile manufacturers have some extent control over the price, but they engage in non-price competition with their own advertising. In the U.S, controlling entire auto industry by just few key players makes it as an oligopoly market structure.
General Motors is one of the big three vehicle manufacturer in U.S auto industry dominated
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However, there are only a few sellers who have homogenous or differentiated products. General Motors has control over price, sets its own price and output level. This way, it has autonomy of pricing and the total output, but need to consider how its competitor react for the price and monthly output to the promotional advertisement. Oligopoly market is therefore characterized by strategic behavior and mutual interdependence (Brue, 2014, p. 211). Consumer put off buying new car during economic weakness of the housing market and it is naturally affected car sales as one of the consumer products. In addition, with the gas price as high as $4 made car purchase less demand of the vehicle like pickups and gas-guzzlers and General Motors revenue started

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