The UK Economy and International Trade Essay Example | Topics and Well Written Essays - 2000 words - 12

The UK Economy and International Trade - Essay Example This essay declares that monopolistic competition is clearly seen in industries such as banking, electronics, fashion and garments, food manufacturing, fast food retail, and almost all personal and professional service industries like hair styling and grooming. For these industries, there are many suppliers whose products are easily substituted for each other; and although differentiation is created in the mind of the buyer, the difference is not so insurmountable that another brand more conveniently accessible could not substitute for the other, first choice. In contrast, an oligopoly exists where only few competitors operate. Unlike in monopolistic competition, wherein the actions of competitors do not influence the others, in oligopoly, output decisions of individual firms have a decisive influence on the course of action the other firms decide to take. In an oligopoly, the following elements are present: A good example of an oligopoly is the market for diamonds, which is dominate d by De Beers, which corners 60% of the market, and other, relatively recently established, diamond firms in Canada, Russia and Australia. De Beers had once monopolized the diamond trade by buying out all its competitors and controlling the price. As more diamond deposits were discovered, De Beers was compelled to try a new tact, veering away from the diamond cartel, and instead embarking on brand strategy. Other oligopolies exist in the industries that produce automobile, cigarettes, cruise ships, and aluminum.