You might have heard of companies which are monopolies or oligopolies, but do you really know what it means or what´s the difference between those two? If not, this might be helpful for you.
Monopolies:
If the market of an industry is controlled by one company, which is very dominant, it is a monopolistic market. Since they are the only company in that field, they can set their prices however they want, because people will buy their things even if it is expansive. Customers have got no other option to buy from, besides this company. Although there are a lot of firms, which buy their competitors in order to gain power, a monopoly rarely happens in reality. This is because of the antitrust regulations. The World Trade Organization and the EU have set up rules for managing monopolistic markets, to protect customers and to promote a healthy competition within the markets. Whereas in the early 19th century, where such laws didn´t exist, there were serious problems with monopolies. It was the time of the diamond boom and there was a powerful diamond company, which dominated this market and forced other competitors to agreements to increase power. In addition, the prices were higher than ever before, and it was the Cournot point. But this imaginably caused problems because at one point some companies stood up against them. That´s why antitrust laws exist nowadays.
Oligopolies:
An oligopoly is a slightly different than a monopoly. It is also a type of market, but in this case, it is dominated by a small group of companies or chains, which are all very successful. The barriers between those competitors and also their customers are usually very high. It is most likely that you either love or dislike one of them but very rare to be convinced of both. Although it is illegal, sometimes those firms agree to a certain collusion of price rather than taking prices from the market. In that way they can influence their customers but also their competitors. In the past this setting of prices happened a lot in the oil or steel market, supermarket chains or the railroads.
So, this are the simple basics of monopoly and oligopoly but now let´s dive deeper into that topic and take a look at some examples.
As I mentioned before Apple and Samsung are two perfect examples for oligopolies. They are both market leaders in technology and very strong competitors. Usually, they release new devices almost at the same time and sometimes they even look alike. Besides, it is very common that customers, who are for example Apple supporters highly dislike Samsung products. Of course, the same appears the other way round too. However, those two companies always try to be better than the other one.
But how did Apple get so popular and dominant?
If you take a closer look into the company and their story you can find the answer relatively quickly. At the time where the founders of Apple came up with their ideas, the world has never seen such technology before. It was something unique and different. The appearance, weight and operating system were special. Furthermore, Steve Job´s speeches were very popular and because of that Apple became a dominant player.