Oligopoly: Selling Ice Cream in Finland
The first Ben & Jerry’s Ice Cream Store was in a renovated garage near the University of Vermont. According to Ben and Jerry, ice cream and Vermont winters complement each other because you feel warmer when the inside of your body and the outside air have a similar temperature.
Among the biggest ice cream consumers in the world, the average person in Finland (much colder than Vermont) enjoys close to 3.3 gallons a year. Now though, Finland’s ice cream intake has been decreasing. The reason is a sweets tax that was introduced in 2011. Paying close to an extra 60 cents for every 2 pints, Finns now eat 20% less ice cream annually.
Still though, people in Finland are among the world’s biggest ice cream eaters:
With a 45% share of Finland’s ice cream sales, Nestlé is the dominant seller. Unilever, also the owner of Ben & Jerry’s, is #2 with a 21% slice of the market. When 2 firms control 66% of all sales of a good or a service, we can conclude that the competitive market structure is oligopoly. There are few sellers, they have price making capability, and they depend on mass production. In many of the big ice cream countries, Unilever and/or Nestlé have a large market share.
Sources and resources: Reading about Finland’s ice cream tax first in WSJ and also here, I recalled my own research on Ben & Jerry that I describe in Econ 101 1/2. For a bit more on Finland’s ice cream market, this overview from Euromonitor is interesting. And, a hat tip to businessinsider.com for the Unilever graph.