The
historic patent war between Samsung and Apple has finally comes to an end with
Apple suing its rival, Samsung. However, the argument between what types of
market structure both of these two kings of smart phones has yet still remains
a question. Is the smart phone market a monopolistic competition or oligopoly?
ECONOMIC INFLUENCE FACT- OLIGOPOLY AND MONOPOLISTIC COMPETITION
Many people wondered what would have
been the type of market models in the smart phone market recently. An oligopolistic
market have large amount of companies that produce smartphones in the industry
all over the world. There are only a handful of firms offering the great
product such as Apple, Samsung, HTC and so on. Meanwhile, a monopolistic
competition would occur if there were thousands of companies out there making
smartphones as it certainly involve large number of suppliers. As for the type
of products, they are differentiated in terms of features in the smart phones since
the phones are differentiated in the Oligopoly system. It is also difficult to
enter the industry due to high barriers such as patents, copyrights,
advertisements and also economic of scale. Oligopoly is hence characterized by
mutual independence and strategic behavior. Price implementing, quality,
service and advertising strategies are parts of the market structure to expand their
profits. Unlike the monopolist which has no rivals, the oligopolist have to
consider how its rivals will react to any change in price, output, product
characteristic and other in terms of mutual independence. Furthermore,
Oligopoly system is also to be said as few number of firms that well aware of
each other and anticipates each other’s moves.
CONCLUSION
Hence,
after analysis the situation I believe that a smartphone is an Oligopoly. The
smartphone market is similarity dominated by a handful of companies. These
companies have deep relationship with the handset provides and are
relationships become self-reinforcing as they grow