What are case studies showing examples of oligopoly in India?

1 Answer | Add Yours

tamarakh's profile pic

Tamara K. H. | Middle School Teacher | (Level 3) Educator Emeritus

Posted on

An oligopoly is a market structure in which only a few sellers dominate a market; they could sell either "homogeneous or differentiated products," meaning either products that have very little difference or that are very different (Economics Online, "Oligpoloy"). An oligopoly is a cross "between a monopolistic competition and a monopoly" (Chand, "The Oligopoly Market: Example, Types and Features"). A monopolistic competition is one in which all firms market very similar products that can easily be substituted, whereas a monopoly is a market structure in which one firm or group of firms owns either all or almost all of the market (Investopedia, "Monopolistic Competition"; Investopedia, "Monopoly"). By controlling the market through only a few firms, the firms are able to "influence prices and thus directly affect the position of competitors" (Everest Group, "India (IT) Inc.--An Oligopoly?").

It has been argued that India-based IT service providers, such as Cognizant and TCS, are acting as an oligopoly. It has been reported that one way in which India-based IT companies influence prices is by using high company turnover rates and the inflation of wages to moderately increase prices. Another way is by fixing prices on projects and adding a risk premium, even though their job consists of "nearly risk-free work." And many other means of influencing prices can be seen (Everest Group). It has also  been argued that India also has oligopolies in their aluminum, cement, steel, and automobile markets (Chand).

Sources:

We’ve answered 318,994 questions. We can answer yours, too.

Ask a question