How does the government influence oligopolistic behavior?  or Describe how the ice cream industry fits the oligopoly model.The federal trade commission's approval of nestle's acquisition of...

How does the government influence oligopolistic behavior? 

or

Describe how the ice cream industry fits the oligopoly model.

The federal trade commission's approval of nestle's acquisition of Dryer's grand ice cream, inc. two multinationsas, nestle sa abd ybukever are preparing to engage in ice cream war.  Unilever, that control the good humor, ben and jerry and bryers brands, hotels 17 percent of the U.S. market, while nestle, owner percent of the haagen-dazs and drumstrick brands, will control a similar share after buying dreyers. Under the FTC settlement, Nestle willb e allowed to keep dreyer's distribution network that delivers ice cream directly to more than 85% of US grocers. Unilever must use middlemen to deliver most of its good humor and breyers products.  Nestle can expand from dreyers supermarket base to cinemas and gas stations with little extra cost.  Nestle agreed to sell a number of dreyers secondary brands as part of the FTC approval.  However, Nestle-dreyers will be able to sign more licensing agreement with the wider distribution network and combined company will be able to turn more of nestle's candies into dreyer's ice cream.

Asked on by nicety52

1 Answer | Add Yours

enotechris's profile pic

enotechris | College Teacher | (Level 2) Senior Educator

Posted on

Since government by nature becomes more oligarchic if not checked, it encourages the same in business.  However, businesses that engage in oligarchies across an industry, otherwise described as "collusion,"  stifle innovation and competition, which leads to a closed, coercive market, which is what you're describing.  In theory, that's what government is supposed to guard against, and maintain a "level playing field" through antitrust laws.

We’ve answered 318,995 questions. We can answer yours, too.

Ask a question