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An oligopoly (from Ancient Greek ὀλίγος (olígos) 'few' and πωλέω (pōléō) 'to sell') is a market in which pricing control lies in the hands of a few sellers. [ 1 ] [ 2 ] As a result of their significant market power, firms in oligopolistic markets can influence prices through manipulating the supply function .
Example: Network providers [6] ( Entry barriers, Small number of sellers, many buyers, products can be homogeneous or differentiated). Three types of oligopoly. Three types of oligopoly. Due to the hallmark of oligopoly being the presence of strategic interactions among rival firms, the optimal business strategy of an enterprise can be studied ...
Duopoly is the most commonly studied form of oligopoly due to its simplicity. Duopolies sell to consumers in a competitive market where the choice of an individual consumer choice cannot affect the firm in a duopoly market, as the defining characteristic of duopolies is that decisions made by each seller are dependent on what the other ...
Oligopoly: If the industry structure is oligopolistic (that is, has few major competitors), the players will closely monitor each other's prices and be prepared to respond to any price cuts. [8] Applying game theory, two oligopolistic firms that engage in a price war will often find themselves in a kind of prisoner’s dilemma. Indeed, if Firm ...
For example, the cost to develop a factory and obtain the initial capital required for manufacturing can be seen as a structural barrier to entry. A strategic barrier to entry is a cost incurred by new entrants that is artificially created or enhanced by existing firms. [ 4 ]
Examples are Cournot oligopoly, and Bertrand oligopoly for differentiated products. Bain's (1956) original concern with market concentration was based on an intuitive relationship between high concentration and collusion which led to Bain's finding that firms in concentrated markets should be earning supra-competitive profits.
In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices, which is associated with unfair price raises. [2] Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or ...
An industry in this range is likely an oligopoly. An oligopoly describes a market structure which is dominated by a small number of firms each with significant market shares. High concentration 70% – 100% This category ranges from an oligopoly to a monopoly.