When one firm possesses a large share of the market but competes against numerous small firms each offering identical products, such markets are called:
A)oligopoly markets
B)dominant firm markets
C)differentiated markets
D)homogenous product markets

Question

Quizplus · Accepted Answer

In dominant firm markets, there is one large firm that possesses a significant share of the market while numerous small firms offer identical products. This type of market structure is different from oligopoly markets where there are a few large firms competing with each other and differentiated markets where firms differentiate their products from competitors. Homogenous product markets sell identical products, but there is no dominant firm in such markets. This scenario is known as a dominant firm market, where a single large firm dominates the market and sets the price for a homogenous product, while smaller firms can enter the market but cannot influence the price. This is different from an oligopoly market, where a few large firms control the market and can collude to set prices or divide the market amongst themselves. Differentiated markets refer to markets where firms offer different products that are not identical, and homogenous product markets refer to markets where all firms offer identical products.

When One Firm Possesses a Large Share of the Market