The Possibilities And Effects Of Raising Prices Above Competitive Assignment

The Possibilities And Effects Of Raising Prices Above Competitive Levels In Oligopolistic Markets - Assignment Example Examples of oligopoly in our economic system today include Steel industry, Aluminum, Film, Television, Cell phone and Gas among others (Perloff 2011). The probability of raising prices above the competitive levels demand a detailed understanding of the oligopolistic markets and the influential trends involved. Normally, the possibilities prevalence depends on the desire of the involved firms for success. In this piece, the mention of the possibilities would imply the probability of occurrence of raised prices above the competitive levels. In this situation, when such an issue is mentioned, many would tend to begin asking themselves on whether the probabilities are activity prompt or automatic. Again the choices by the firms in the market that attribute to alteration of the prices beyond the competitive levels have consequences. Moreover, the essential point to understand in this scenario is the essence of prices, their thresholds and the effect of status in the oligopolistic market (Mansfield 1982). Oligopolistic markets have variant features relating to the prices such as the limited number of firms selling the same commodities. If there are a number of firms dealing on similar products then it implies that there must be a significant extent of competition for which the price is a critical factor. Altering the price in a particular firm would impact the entire market since one of the market forces is altered. The provision of branding of products by different firms means that the products are distinct and each might be identical to the associated firm. The entry barriers might possess a negligible concern albeit they are considered imperative due to their significant influence and regulation in the number of firms (McGuigan, Moyer & Harris 1999). Firms in the oligopolistic market cooperate to determine prices and endeavour to uphold the price levels. The prices are regarded as monopolistic since they are the main point of concern in the market. The firms compete on the prices m in order for the prices to remain as a competitive industry model. In the situation where firms compete on prices, the desired price is regarded as the competitive level price. This implies that evident consequences can result if any firm elevates its prices beyond the actual one determined by the competition in the market (Cassimatis 1996). The monopoly as well as the competitive scale is responsible for the determination of price and the benefits involved in the market. Oligopolistic market prices and the consequential profits are indefinite since the challenges in modeling inter-reliant price productivity deliberations (Glahe & Lee 1982). Background Investigation Having looked at the oligopolistic markets, what are would be the possibilities and effects of raising prices above competitive levels? In order to have an in-depth understanding of the preceding question, we have to understand