Kellogg oligopoly

The inspiration for these cost-cutting measures is largely derived from decreased demand that stems from higher unemployment and decreasing income. Another issue facing Kellogg is increased competition; the company is losing ground to competitors who offer healthier alternatives like yogurt and oatmeal bars.

Kellogg oligopoly

Markets Economics Article Shared by Get the answer of: Oligopoly refers to a market situation or a type of market organisational in which a few firms control the supply of a commodity.

The competing firms are few in number but each one is large enough so as to be able to control the total industry output and a moderate. However, increase of its output or sales will reduce the sales of rival firms by a noticeable amount.

The chief characteristic of oligopoly is the interdependence among the rival sellers. Oligopoly is of two types: Here, the oligopolists sell practically homogeneous products. This type is found in steel, copper, cement petrol and a few other industries. In such a case a few firms sell similar but not identical products under the same conditions.

It is found in automobiles, tyres, electrical appliances, cigarettes, baby food and a few other industries.

Kellogg oligopoly

Problems of Price Determination under Oligopoly: In an oligopoly market the determination of price and output by Kellogg oligopoly firm creates problems. The main problem arises in the construction of a stable and a certain demand curve for the product of an oligopolist.

This point may be explained further. Such an interdependence among the rival produces is the key feature in an oligopoly market.

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Kellogg oligopoly changes are not uniquely predictable. An oligopolist is not a big enough part of the market like a monopolist to be able to act as a price-maker.

It is not a small enough part of the market like a competitive seller to be able to act as a price-taker. So, an oligopolist is neither a price-taker nor a price-maker.

It is essentially a price-searcher. An oligopolist cannot set any price for its product independent. It is so because there is interdependence among the oligopolistic firms. The most important aspect of oligopoly market is reaction of rival films. A firm has to take into consideration the readiness of rival firms before taking any decision on pricing or even advertising.

This introduces an element of uncertainty in oligopoly markets. But is it that easy to estimate the demand for cars, or the share of Hindustan motors in the car market?

Just to eliminate oligopolistic uncertainty and to oligopoly behaviour economists make use of models. And oligopoly litterateur is hill of models. Some of the major models are: The price-leader may be the lowest cost firm, or which is more likely, the dominant or largest firm in the industry.

In the latter case, the dominant firm sets the price, allows the other firms belonging to the industry to sell all they want at that price, and then the dominant firm enters the market to meet the residual element. Paul Sweezy has developed his model on the basis of the kinked demand curve.

This model tries to explain the price-rigidity often observed in oligopolistic markets. The oligopoly situation as also the duopoly situation has one feature which has drawn the attention of economists.

In an industry which consists of a small number of big companies or dominant firms, if one of them opens a tremendous advertising campaign or designs a new model of his product which captures the market, he can be fairly sure that this will lead to reactions and countermoves on the part of his rival producers.

The reason for this interdependence in decision making is, of course, simple enough — a major policy change on the part of one firm is likely to have obvious and immediate effects on the other companies which belong to the industry.

As a result the oligopolist develops various aggressive and defensive marketing weapons. For example, it is only under oligopoly that advertising assumes full significance. Under oligopoly, advertising can become a life-and-death question, where a firm which fails to keep up with the advertising budget of its competitors may find its customers switching to rival products.

Oligopolistic interdependence has another consequence which is more significant for the economic literature than for the operation of the economy. This feature of oligopoly has made the formulation of a systematic analysis of oligopoly virtually impossible. Under the circumstances a very wide variety of behavioural patterns seems possible.

Rivals may decide to join hands and cooperate to fulfil their objectives; at least so far as the law permits, or at the other extreme, they may try to fight each other out. Even if they enter into an agreement it may last for sometimes or it may break down quickly.

And the agreements may follow a wide variety of patterns.The four major suppliers are Kellogg, General Mills, post and Quaker How many suppliers are there? In the breakfast cereal industry competition is low to medium because these product are in grocery stores and similar to identical that how it's oligopoly.

agent qualitative-response setup to analyze entry in oligopoly markets. The observed number of market participants is the dependent variable; it is the equilibrium outcome of a game in which firms choose whether to enter the market.

In both articles, a reduced-form profit function de-. Oligopoly is the middle ground between monopoly and capitalism.

An oligopoly is a small group of businesses, two or more, that control the market for a certain product or service. An oligopoly is a small group of businesses, two or more, that control the market for a certain product or service. C. Monopolistic Competition (Lesson 11a) differentiated oligopoly - An oligopoly in which the firms produce a differentiated product.

A recent example occurred in the breakfast cereal industry in which Kellogg had been the traditional price leader. 3.

Examples - current or recent. Farm Machinery Cement. Economic Analysis. The cereal industry is an oligopoly with four large companies and a few very small niche small niche companies hold very little market shares, approximately % in , with the big four holding the other %.

Kellogg's, doing business as The Kellogg Company, is an American multinational food-manufacturing company headquartered in Battle Creek, Michigan, United States. Kellogg's produces cereal and convenience foods.

Why is breakfast cereal is considered an oligopoly? by Austin Ericson on Prezi