Are the airline and automobile industries really oligopolies as the books claim? Wouldn’t a real oligopoly have enough pricing power to earn consistent profits rather than bleed cash on a regular basis?
I think with the automotive industry: Cars have been around for almost 100 years now. And when you’re down to the basics all cars are the same. There’s only so many ways to make them using the cheapest materials and labor allowed. There’s been year after year of company’s buying competitors cars and taking them apart and rebuilding them. The competition between car makers has become so intense. And what little money they do end up seeing from their margins goes into huge R&D budgets and marketing campaigns. Also have to meet different safety standards and testing in different nations. Huge workforce and if you produce one model of car with a defect (ie. recall) you can pretty much start filing chapter 11 or come close to. Now that I think of it you can say the same about the airline industry. I think oligopoly should be looked at more in a sense of the intensity of rivalry between firms and the industry in which they operate and not just the number of firms.
Bump Oligopoly is more about the competition between the smaller number of firms in the industry rather than any other independent factor. Taking that into consideration means looks at the differentiation aspects as well as things like advertising and product defects.
The fact that profit margins in the car industry have been low and now even negative is because the production capacities are too big, much bigger than justified by demand. Moreover, inflexible labor rules have made it almost impossible for the industry to scale down.