In class we have learned about the different market structures that exist in the world. They are basically divided into four types namely
• Perfect competition
• Monopolistic competition
• Oligopoly The most prevalent type of market structure in today’s world are monopolistic and oligopolistic competition and in some cases monopoly. The article that I had chosen takes about the ongoing price war between the e-commerce giants of India; Flipkart and Amazon. I feel that the competition between Flipkart and Amazon is an important one in today’s world since most of us use either of the both to purchase most of our products, let it be books, electronics, clothes etc. Online shopping has now become an integral part …show more content…
• The product sold may be homogenous or heterogeneous.
• The firms in an oligopoly market have an indeterminate demand curve.
• There is restricted entry of firms in this type of market as there may be barrier in the form of technology used, or capital needed etc.
Now let us check if the case of Flipkart and Amazon satisfy these criteria.
• Few firms:
There are a few firms in this industry like Flipkart, Amazon, letsbuy, homeshop 18.Hence it fulfills the first category where there are a few firms and each has certain influence over the price and output produced. Hence we can agree that the online retail industry constitutes an oligopolistic market.
• Interdependence and price rigidity:
We can see that most of these firms are mutually dependent on each other in matters regarding to price and output. Firms dare not influence the price and output as it his action would be met by retaliatory actions like how change level of investment by Flipkart is met by a change in level of investment by Amazon. Hence such dependence would lead to price rigidity in the market.
• Nature of product and Restricted