Is Microsoft an oligopoly? Microsoft and the Oligopoly must first be identified separately before identifying whether Microsoft is an oligopoly.
Do you know microsoft
Microsoft was founded in 1975 in the United States by Bill Gates, and Paul Allen. Its function is to develop various software for computers such as Microsoft Windows and Microsoft Office. These are the most used computer software in the world.
What is oligopoly in economics?
An oligopoly is an industry dominated by a few large firms (Few sealers supplying, many buyers). These firms are large enough that their quantity influences the price and so impacts their rivals. Consequently, each firm must condition its behavior on the behavior of the other firms.
The main features of oligopoly
- An industry that is dominated by a few firms.
- Barriers to entry.
- There is Perfect Knowledge or Information about the Market
- Prices may be relatively stable throughout the industry
- Legal and non-legal cooperation
- The price is higher than the marginal cost of a product
An industry that is dominated by a few firms
There are several characteristics of an oligopoly. One of the characteristics of an oligarchy is that it has a few large institutions. For this reason, Is Microsoft an oligopoly
Yep. Microsoft is a software development company. There are several other software companies in the world, such as Apple and Linux. That is, Microsoft is an oligarchy because it is one of the software companies.
Is microsoft an oligopoly ……. Barriers to entry
In an oligopoly, there are barriers to entry. There are two types of barriers that prevent a new entity from entering an oligarchy market. They are
- Legal barriers
- Non-legal barriers
Legal barriers – Microsoft holds a patent to create windows software.
Non-legal barriers – As a new entity seeks to enter the market, companies such as Microsoft discourage new entrants by releasing large quantities of software into the market at low prices.
There is Perfect Knowledge or Information about the Market
Another feature of an oligarchy is there is Perfect Knowledge or Information about the Market. That means, the firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms.
Microsoft is the top-ranked number one computer software company.
The top 13 companies in terms of market capitalization in the 2019 Forbes list for the “Software & Programming” industry are listed in the following table. Owner: Wikipedia.
|Rank||Organization||Sales (B$)||FY||Market cap (B$)|
As Microsoft company has expert knowledge this company is top-ranked.
Prices may be relatively stable throughout the industry
In an oligopoly market structure Prices may be relatively stable throughout the industry. Microsoft has a tough price. That is, the price of the company’s products is not easily reduced or increased.
Is microsoft an oligopoly……..Legal and non-legal cooperation
Microsoft has partnered with Apple and Linux. Legal and non-legal cooperation is a feature of an oligarchy.
The price is higher than the marginal cost of a product
The price is higher than the marginal cost of a product in an oligopoly. Marginal cost is the cost of making an additional product. This is because the consumer is not fully aware of the product.
That is, Microsoft charges a higher price than the cost of producing the software.
For these reasons, Microsoft can be described as an oligopoly.
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