the Organization of Petroleum Exporting Countries.

OPEC

OPEC : Future moves (Name (School (Professor (Course

Abstract

The Organization of Petroleum Exporting Countries , or OPEC , groups together the world 's largest producers of oil . The group essentially dictates the world 's suppply of the commodity available in the market and the prices that oil is bought and sold in the global market . Is the OPEC a monopoly , an oligopoly , or a cartel ? If it falls under any of the following terms , what are the plans of the oil body in the future

Definitions and a look into the future

p In the business world , different entities usually are the major players in the arena . Some though are accused of forming monopolies , oligopolies or cartels . We connote things when one entity controls one mode of production or have a large chunk of the market as a monopoly . But is the label accurate ? Or is it a case of mislabelling

We must seek to define these terms yo have a better understanding of their mechanisms and their scope . Monopolies exist when there is a single producer or manufacturer of a product or service (Encarta , 2008 This situation is created when there is no serious threat or new competitor ready to enter and challenge the existing structure in that market , thus enabling the monopoly to dictate the price for the product or service (Encarta , 2008 . This scenario would usually result in dearth of competition , mediocre products and exorbitant prices (Investopedia 2008

There are exceptions ot this scenario , however . The granting of patents on new products affect monopolies , as this curtail the time frame for a monopoly on a product (Investopedia , 2008 . An example of monopolies is the entities that are established by governments to provide basic public services (Investopedia , 2008 . These would include public utilities such as water and electricity concerns (Investopedia , 2008 . This is to ensure the delivery of these services to the public at the lowest price economically possible (Investopedia , 2008

Oligopolies , on the other hand , exist when the market is host to a very small number of firms that produce one product or render a service (Encarta , 2008 . Companies situated in an oligopoly are those that maufacture branded items and also exhibit hindrances to the new players market 's entry (Tutor2u . A key characteristic of an oligopoly is that the companies in this area are interdependent on each other (Tutor2u It is here when the actions of one of the firms in an oligopoly affect all the firms in this particular set-up (Tutor2u . An example would be Safeway , Wal-Mart and Kroger , as this would be in the area as a grocery oligopoly (Steve Hannaford , 2003

Companies in a cartel agree among themselves either formally or informally to diminish or stifle competition a single business area (Encarta , 2008 . The cartels are in effective control of the production and distribution of the product in their control (Encarta , 2008 . The primary activities of a cartel would include any of the following-price-fixing , putting ceilings on the availability of the product , and pooling their...