Which of the following best explains why the media industry is characterized

by an oligopolistic market structure?

O

A. There are many innovative entrepreneurs in the media.

O

B. Centralization of ownership has led to an industry controlled by a

few large companies.

O

C. Government licensing allows media companies to have a near

monopoly.

O

D. It is impossible for any company to compete with a local media

company

The answer is C. Government licensing allows media companies to have a near monopoly.

Explanation:

Not anyone can start a media company just because they want to. There are barriers to entry such as the large capital expenditure, staffing, and the government licensing.

Among these, the major contributor towards the marketto become an oligopoly is the government licensing process.

There are many things to consider and do during the licensing process and it is highly time consuming as well. Moreover, the costs involved is significantly high as well.

C. Government licensing allows media companies to have a near monopoly.

Explanation:

An oligopolistic market is a market structure with a few numbers of firms, each firm has no control over the no firms. In an monopolistic market, there is barrier to entry and exit, and each firm can trade either differentiated or identical.

The media company is characterized with an oligopolistic market because of the monopolistic power given to few media companies.

The monopolistic power hinders just anyone to come into the industry, hence there is barrier to entry and exit.