An Examination of Pricing Strategy the Lego Group, Ltd

|Running Header: Pricing Strategy | |An Examination of Pricing Strategy | |The LEGOTM Group, Ltd | | | |Jay R. Johnson | |4/1/2012†¦show more content†¦An Oligopoly is similar to a monopoly in that there is restricted competition due to barriers to entry, but unlike monopoly there is competition. In Oligopolies there are just a few, very large firms, competing with similar or identical products.[3] Examples of oligopolies are oil companies and automobile manufactures. Unlike monopolies these firms have to take into account what the other firms will do and either adjust their prices in order to gain advantage over one another or collude with one another in order to become a monopoly (Oligopoly market Structure, 2007-2012). The latter being what most individuals fear when they think of monopoly; not allowing the market demand to set the price of goods coming to market, but instead limiting the supply in order to drive up the price of a product. The United States anti-trust laws are designed to limit firms’ ability to do this, but due to the amount of time it takes to prove such actions th eir effectiveness is limited. In the case of oligopolies the barriers to entry are what prevent firms from competing, and firms instead produce as much capacity as their infrastructure allows and set the price to clear the market. The more firms that compete, the more likely the aggregate welfare of the economy is to be satisfied, and the less likely that one firm can affect the whole industry. 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