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Maruti, Tata, Fiat, Ford and GM are only a few auto producers in the Indian market. Identify the form of market in which they sell their products and also explain its features. If these companies decide to form a cartel, then win the consumer stand to benefit?

Answer:

These companies sell their products in oligopoly market. Oligopoly is a form of market in which there are a few big sellers of a commodity and a large number of buyers. Its main features are explained below: (i) A Few Firms A few firms, but large in size dominate the market for a commodity. Each firm commands a significant share of the market which can impact market price of the product. (ii) Large Number of Buyers There are a large number of buyers of a commodity. The number is so large that no individual buyer can impact market price of the product. (iii) Formation of Cartels With a view to avoid competition, firms may form a cartel. It is a formal agreement among the firms to avoid price competition. (iv) Non-price Competition Under oligopoly, firms tend to avoid price competition, e.g. in India, both Coke and Pepsi sell soft drink at the same price. However, in order to enhance its share of the market, each firm tries to resort to non-price competition.                                             If these companies form cartel, then this would lead to non-price competition and the consumer would be exploited.