Oligopoly in the Passenger Vehicle Segment of The Indian Automobile Sector – A Meta-Analysis

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Subramanian Ramachandran, B.P. Chandramohan

Abstract

The main point of this paper is to advance the general understanding of market dynamics and the imperfections that creep in when an industrial sector or a sub-sector matures. This article effectively highlights the different factors that directly contribute to market imperfections within the automobile sector. It examines competition among automakers in the passenger vehicle sub-segment. It is concerning market power, concentration, as well as type of market. It analyses how it manifests and its effects on the automobile and automotive sector. Nevertheless, it examines several aspects such as the lock-in effect, market variability and shelf-life, production capacity. These aspects also including associated strategy along with competitiveness. Furthermore, the paper also studies how collusion is contributing to complexities and practices that lead to market imperfections, resulting in oligopoly and monopsony. The dichotomy is when oligopoly contributes significantly to undermining competition while demanding higher prices for their final product. At the same time manufacturers and suppliers of components view monopsony as a serious threat to their capacity to negotiate prices despite having production efficiency, consequently reducing their profitability. The tendency of the monopsony input market is the cause of social losses like the creation of unemployment and lower collection of corporate and indirect taxes. They are also likely contributory factors for the perineal dwarfism of Micro and Small Industries among MSMEs. The Micro and Small Industries serve as captive suppliers, manufacturers or vendors to large enterprises (LEs) and Original Equipment Manufacturers (OEMs).

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How to Cite
Subramanian Ramachandran, B.P. Chandramohan. (2024). Oligopoly in the Passenger Vehicle Segment of The Indian Automobile Sector – A Meta-Analysis. European Economic Letters (EEL), 14(4), 2160–2173. Retrieved from https://www.eelet.org.uk/index.php/journal/article/view/2383
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