Defining the new Oligopoly...nice site

[SoCalDem]

http://www.oligopolywatch.com/


Defining the new Oligopoly

Oligopolies have been around as long as commerce has. The term denotes a situation where there are few sellers for a product or service. The members of an oligopoly change the nature of a free market. While they can't dictate price and availability like a monopoly can, they often turn into friendly competitors, since it is in all the members' interest to maintain a stable market and profitable prices.

The new oligopoly is made up of multinational corporations that have chosen specific product or service categories to dominate. In each category, over time, only two to four major players prosper. Starting a new company in that market segment is difficult, and the few that do succeed are often gobbled up or run out of business by the oligopolies.

Few multinationals aspire to be monopolies. Monopolies attract government regulation and consumer anger (just ask Microsoft). Small oligopolies (such as Coke, Pepsi, and Cadbury-Schweppes) make plenty of money and avoid the constant attention of the regulators.



About this site

This site is an attempt to make sense of the business pages in the newspaper, particularly the stories about mergers and acquistions. I am developing a theory about how and why big companies keep growing bigger, and some of the dynamics behind their moves. This fits into a larger work I call "Shelf Life, Shelf Space, Mind Space" that I am working on. In part, this blog is my way of keeping a diary of the many moves toward oligopoly that take place every day.

Are oligopolies sinister? Very possibly. But I think it's more useful to see how and why they work than simply rail against globalism and greed. While there are hatefully crooked businessmen (take any set of former Enron or Tyco executives for a start), most oligopolies are based on struggles for survival, not a result of innate evil. Like those proverbial sharks moving forward, businesses either grow or fail, and since most mature markets have limited growth potential, companies often grow by buying other companies. If nothing else, it's fascinating to see how they do it.