EVILS OF OLIGOPOLY
There is generally a continuous price war which finally results in disastrously low level of prices. Whcn some of the producers find themselves at an advantage. they wiLL push up the prices crca!in)! an anomalous and discriminatory pattern of prices charged from the consumers. Such cut-throat competition in industries characterised by heavy overheads and increasing costs proves ruinous to all producers. Realising this. they may tacitly or explicitly enter into price agreements: which may result in the exploitation of the consumers. A tendency to earn a fair return on past investments, resulting in the excessive plant capacity. is detrimental to consumer’s welfare, because they face scarce output and high prices. Hence, cut-throat competition may be, essential to liquidate excess capacity through losses or sub-normal profits. Unlike perfect competition. under which price falls when demand decreases, output remaining the same. in oligopoly. prices stay firm, and only output varies resulting in idle plants. This i~ had for society and had for the consumers. Government regulation is necessary (al to pull down harriers to the cntry 10 new firms. (h) frown on colliSion, to maintain lices and restrict
supply, and (c) to break big or to prevent them from becoming higher.
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