Oligopoly Essay Example | Topics and Well Written Essays - 2000 words

Oligopoly - Essay Example In relation to costs it shows that in an oligopolistic market firms will not raise their prices because even a small price increase will cause them to lose many customers and at the same time a large price decrease by the owners will gain only a few customers because such an action will begin a price war with other firms. The curve is therefore more price-elastic for price increases and less so for price decreases. In a kinky demand curve as in an oligopoly marginal costs could change without necessarily changing the price or quantity. Being an Oligopoly the EU car market will be experiencing an average cost curve that will represent benefits from substantial economies of size. These firms have actually become large and powerful and with the increased output they have low processing and operating costs. The EU car industry clearly has just a few ruling firms in the industry which will be watching each others pricing and output strategies very closely. Moreover it should be noted that the EU car industry might actually be benefiting through its oligopolist structure(although the practice of price discrimination cannot be applauded).The car industry has to maintain its factories and pay its workers regardless of the amount of output /cars it produces every year. They can probably not afford a perfect competition situation where there would be price competitions and losses which would have an adverse effect on the safety and quality of the cars. This diagram shows that the car industry being a technically differentiated oligopoly(different types of cars) produces at a profit maximizing level of output where marginal cost equals marginal revenue. The firm finds the price it will charge customers at the profit maximizing level of output (Qm) from the demand curve, and sets price to Pm. As we can see, the firm is earning economic profits since price exceeds the average costs at the profit maximising level of output. Now coming back to the issue the question addresses , it is a fact that for many years there is large scale price discrimination in the European Car Market. For example figures show that in 2001the pre-tax price of a Mazda 323 was 10,525 in the UK ,7,404 in Greece and 6,266 in Denmark ( European Commission, July 2001. )This has largely been blamed upon the fact that the European Car Industry is exempt from European competition law. .This situation has allegedly led to a rather oligopolistic arrangement by the persons involved in the car industry as they operate a rigid network of national or regional dealers which are chosen by car manufacturers, to flourish. Allegedly this is also where British car buyers have been particularly discriminated against. The European Car market is not a freely competitive market. As an oligopoly then the EU car industry experiences downward sloping long run average cost curve. The tactic that this industry uses is to increase profits by expanding output and/or merging to take advantage of economies of scale. As a result the

Nuclear Plants and Their Impact on the Environment Essay

Nuclear Plants and Their Impact on the Environment - Essay Example Accidents from nuclear reactors in the late 1970s and early 1980s led to end to the initial rapid growth in nuclear power capacity. These comprised the 1979 Three Mile Island accident (USA) and the 1986 Chernobyl disaster (Ukraine) (Cracolice & Peters, 1997). In 2011, a hard-hitting tsunami led the Fukushima I Nuclear Power Plant to leak, resulting in hydrogen gas explosions and partial meltdowns. In order to caution the immediate populations from the adverse effects of the disasters, the Ukraine government enacted a 30 kilometers no-settlement policy around the Chernobyl power plant while the Japanese government implemented a 20 kilometers cautionary zone around the Fukushima I plant (Hoeve & Jacobson, 2012; Bennett, Bouville, Hall, Savkin & Storm, 2000).Radioactive DecayUsed up nuclear fuel from uranium-235 and plutonium-239 nuclear fission contains more than 100 carcinogenic radionuclide isotopes such as strontium-90, iodine-131 and caesium-137, and includes some of the most long- lived transuranic elements such as americium-241 and isotopes of plutonium. Disposal of these wastes in engineered facilities, or repositories, located deep underground in suitable geologic formations is currently the best disposal solution fronted (Cracolice & Peters, 1997).Nuclear Accidents and ConcernsDebate over the reliability, durability and quality maintenance of old nuclear installations has emerged following leakage of radioactive water in over twenty US nuclear power plants. Tritium is a radioactive isotope of hydrogen that emits a low-energy beta particle. It may be present in water emanating from a nuclear plant (Casas et al, 2004; Cracolice & Peters, 1997). The main concern over tritium is the high possibility of its entry into drinking water, in addition to the subsequent presence in crops that depend on tritium-contaminated waters. Uranium is mainly mined for use in nuclear power plants. The 1979 Church Rock uranium mill spill in New Mexico led to the flow of over 1,0 00 tons.