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What type of market structure is the electric car industry?
I want to invest in the electric car industry, but I’m afraid I don’t know enough about the market as a whole. What type of market structure is the electric car industry?
Allison Stone · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
The
electric car
industry is one of the fastest-growing segments in the automotive world today. Market structure refers to the characteristics a specific industry as it behaves within the economy. The four types of market structure are perfect competition, monopolistic competition, oligopoly, and monopoly.The electric car market has an oligopoly market structure.
An oligopoly indicates a state of limited competition, where a market is shared by a small number of producers or sellers. Other examples of oligopolies include:
- Wireless carries
- Domestic airlines
- Media conglomerates in film and television
- Music labels
If you’re wondering why it seems difficult for new brands or startups to enter the EV industry, it is largely due to the market’s oligopoly station. Reasons that the EV industry exists as an oligopoly include:
- High demand from buyers to purchase from existing companies.
- High barriers to entry that require large amounts of capital
- High product price.
This shouldn’t deter you from buying an electric car of your own or investing in an EV company, you should just be aware that the options for buyers or investors are more limited than in other industries.
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car insurance
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- Gregory R.
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