Oligopoly Market Are That There Research Proposal

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In perfect competition, only normal profits are made in the long run and monopolistic competition trends towards a relatively equal distribution of income (Hartzenberg, 2005). This relationship implies that the further the market is from perfect competition, the further the distribution of income will be from equal. An oligopoly, therefore, will not deliver equal distribution of income.

In perfect competition, distribution of income is equal because all factors of production are earning their opportunity costs.

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An oligopoly sees adjustments to barriers to entry and exit, as well as a constriction of information. This reduces buyer power. If buyers have a lower degree of pricing power, the seller will take more of the income. Income distribution, therefore, is tilted in favor of the firms in the oligopoly.

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