Toyota Oligopoly Analysis

The firms that we had selected for this assignment are Perodua and Toyota. The market structure of both of the companies can be classified as the oligopoly. One of the characteristics of oligopoly is there are only a few sellers in the market. As an illustration, Proton is one of the local automobile manufacturers while Honda and Nissan are foreign automobile manufacturers. Since there are only a few sellers in this market, the fewer firms dominate and control all or most of the market.
Additionally, Perodua and Toyota are sold homogeneous or differentiated automobiles such as Perodua Myvi 1.5 and Toyota Passo 1.0. The design of both cars is almost homogeneous; however, their specifications are a bit different. For instance, the valve mechanism …show more content…
In a short run, firms may earn profit or loss or zero economic profit. On the other hand, in a long run, firms will earn economic profits due to the higher barriers of entry. Since the patents and copyrights of a brand, as well as the name recognition of a firm, are very hard to obtain a reputation among the public, it also may lead to a higher barriers entry of the market. There is no doubt about that the advanced technology is needed by the firms to create a new product to transform them become a more progressive automobile manufacturer among the …show more content…
Each firm will shape its policies with an eye to the policies of the competing companies. Since there are only a few firms in the market, their competitors’ actions will definitely affect their profits. Therefore, the firms will be planned strategically and anticipated the moves of their competitors. In this technological era, Toyota and Perodua face many intense competitions among the automobile manufacturers. Hence, they have to continue of keeping up their good work to invent something of new to maintain their position in the