Oligopolistic competitive markets have a few firms sharing large proportion of outputs from industries among themselves. This happens as a result of outputs demand not fluctuating when new firms cannot enter the market and compete with the existing firms (Gugler & Szücs, 2016) . One of the firms facing oligopolistic competition is the Golden Sky Limited based in New York City which deals with home appliance, toys, leisure products, fitness solutions, healthcare and personal products. Including Golden Sky Shop there are only twenty players that compete in the market. This market structure comes from characteristics like economies of scale, product differentiation, and barriers to entry.
There are many instances that Golden Sky has kept minding the economies of scale of its competitors before setting its own prices. In this type of market structure, the firms are interdependent on each other when they make decisions on pricing and investments as each oligopolist is aware of the other’s actions (Sonnenholzner & Wambach, 2014) . There is need for a perfect knowledge in economies of scale, costs and demands. As such, the strategic planning of a firm has to be done having in mind the possible reactions of other players in the market.
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Product differentiation is a characteristic of an oligopolistic market structure that ensures companies sell different products with different branding and names (Sonnenholzner & Wambach, 2014) . Golden Sky sells branded products which are toys, leisure products and personal products. Leisure products are also sold by two other companies but due to different brand names they have some slight differentiation.
Barriers to entry do exist and are mostly faced by smaller firms. Some products are unique to only one firm, as such, copyrights or patents act as the entry barriers (Sonnenholzner & Wambach, 2014) . Golden Sky has health care and personal products which are unique and they are only sold by the company. Because of New York City being a city with many cultures and languages, advertising and media costs are higher and they need to advertise the products on different channels in order to reach many customers.
Golden Sky also faces competition from both strong corporate companies and also home shopping companies and other small entities. Its major competitors are Colgate and Avon New York. The uniqueness of Golden Sky’s branding makes it differ from its competitors. Companies like Colgate and Avon New York have their products aired on televisions for 24 hours which is a major competition to Golden Sky. Although there is change in competition overtime, the company has a belief that there is no major change in share of the market. As much as there are competitors, the company still has a majority of customer base in the middle and upper-middle backgrounds of people.
References
Gugler, K., & Szücs, F. (2016). Merger externalities in oligopolistic markets. International Journal of Industrial Organization , 47 , 230-254.
Sonnenholzner, M., & Wambach, A. (2014). Oligopoly in insurance markets. Wiley StatsRef: Statistics Reference Online .
