The current situation is the automobile industry is an oligopoly as there are few big firms and massive barriers to entry due to cost.

However, The industry seems like it is changing to a monopolist competition structure as new firms join the industry (Apple, Google). This is as a result of bigger differentiation’s in cars product (due to software)

  • $\begingroup$ Welcome to Economics.SE! can you put your question in the body of your post? $\endgroup$
    – EconJohn
    Mar 14, 2018 at 3:07
  • $\begingroup$ Are Apple and Google making cars or just fitting AI stuff onto cars other people make? $\endgroup$ Mar 15, 2018 at 6:20
  • $\begingroup$ What makes you think that the entry of new firms is a change to a new mode of competition, rather than just a switch to "oligopolistic competition with slightly more firms than before"? $\endgroup$
    – Ubiquitous
    Mar 15, 2018 at 12:09

2 Answers 2


The automotive industry is being disrupted by new trends such as electric vehicles and self-driving cars. These, still, represent a minor part of the market.

So the answer would be no, for the moment besides media attention, there weren't gigantic shifts in the industry as to have monopolies. Looking at the last years data it seems to remain an oligopoly with 4 very large manufacturers.

If you need further info this is usually not free - look for the automotive industry in business databases such as IBIS world, or get a report from a consulting firm such as this one.


There are still a number of car makers, so at this point it is NOT a monopolistic sector. Barriers to entry are also reduced globally (Asia) due to a decrease in the cost to make a car. I do understand your point on new software, however, the cost of vehicles with the newest and best software is still high to the extent that there is a semi competitive market for individuals who can't afford the newest software. At this point, we an oligopoly. Even if you consider new electric vehicles, multiple players (BMW, AUDI, GM, obviously TESLA, and some Asian companies) are even getting into that market, and the costs are sky high. As costs fall, you will see a scenario in which the marginal cost to entering the market will begin to come closer to the marginal benefit, which will lead more players into the market, which is what happened post model T. It is a similar scenario, just with 21st century technology. The economics are the same. Instead of the model t, we have teslas model s coming, but just like with the model t, we could predict that the market will become more saturated, resembling more of an oligopoly. Google, Microsoft, and Apple are not comparable in that regard. I can only do so many things with a MAC until I HAVE TO GET a Microsoft (as a programmer). However, a car is a car. Slightly different software won't give you a monopoly, because of how individuals use software, compared to how individuals use a vehicle. There are relative substitutes to a model S. There is no substitute to C# with Microsoft if I have to use C#. There is no substitute to SWIFT on IOS if I HAVE TO USE Swift.


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