In The News
The Growth of Oligopoly
This article suggests that oligopolies are becoming a more important part of the U.s. economy.
Big Busines~:Why the’ Sudden Rise in the-Urge to Merge and Form .Oligopolies?
Everywhere you look, powerful forces are driving American industries to consolidate into oligopolies-and the obstacles are getting Jess formidable. The rewards for getting bigger are growing, particularly’ in the world of technology, media, and telecommunications, where fixed costs are especially large and the cost of serving ,each additional customer is small. Some snapshots.
• Twenty years ago, cable television was dominated by a patchwork of thousands of tiny family-operated companies.Today, a pending deal would leave three companies in control of nearly two-thirds of the market.
• 199O, three big publishers of college textbooks accounted for 35 percent of. the industry. Today, they have 62 percent.
• In 1999, more than 10 significant firms offered help-wanted We? sites. Today, three firms dominate.
An oligopoly, a market which a few sellers offer similar products, isn’t always avoidable or undesirable. It can produce deficiencies that allow firms to offer consumers better products at lower prices and lead to industry-wide standards that make life smohth for consumers.
But an oligopoly can allow big business to make big profits at the expense of consumers and economic progress. It can destroy competition that is, vital to preventing firms from push prices well above costs and to forcing companies to change.Rates for cable television, for instance, have soared 36 percent, almost triple the rate of overall inflation, since the industry was deregulated in 1996 and then consolidated in a few big firms.
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