ii) In Oligopolistic-Type Markets
In the brick market today, it is possible at times of low demand to obtain bricks from smaller, independent producers (if a very large order is involved) at less than their listed prices. 1 This is because the decreasing marginal costs of the yards allow profits to be made on these “extra” bricks, even at these lower prices.
The number of smaller yards has however decreased over recent years as yards go out of business or loose their independence. As a result, the price discipline of brick manufacturers is stronger today, and discounts less easy to obtain than they were 30 years ago. This has been a general trend however, and it is very difficult to find evidence that specific mergers have occurred in the past in order to decrease competition. Increased profits in an industry facing a price inelastic demand curve are however a result of this trend.