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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.
It is also called oligopolistic price coordination [6] or tacit parallelism. [ 7 ] A dataset of gasoline prices of BP , Caltex , Woolworths , Coles , and Gull from Perth gathered in the years 2001 to 2015 was used to show by statistical analysis the tacit collusion between these retailers. [ 8 ]
In microeconomics, the Bertrand–Edgeworth model of price-setting oligopoly looks at what happens when there is a homogeneous product (i.e. consumers want to buy from the cheapest seller) where there is a limit to the output of firms which are willing and able to sell at a particular price. This differs from the Bertrand competition model ...
Sweezy argued that an ordinary demand curve does not apply to oligopoly markets and promotes a kinked demand curve. From Queen's College in Oxford , Robert Lowe Hall and Charles J. Hitch wrote "Price Theory and Business Behavior," presenting similar ideas but including more rigorous empirical testing, including a business survey of 39 ...
Without market power a company cannot charge more than the market price. [54] Any market structure characterized by a downward sloping demand curve has market power – monopoly, monopolistic competition and oligopoly. [52] The only market structure that has no market power is perfect competition. [54]
A duopoly (from Greek δύο, duo ' two '; and πωλεῖν, polein ' to sell ') is a type of oligopoly where two firms have dominant or exclusive control over a market, and most (if not all) of the competition within that market occurs directly between them. Duopoly is the most commonly studied form of oligopoly due to its simplicity.
Oligopsony, a market where many sellers can be present but meet only a few buyers. Example: Cocoa producers; Cournot quantity competition, one of the first models of oligopoly markets was developed by Augustin Cournot in 1835. In Cournot’s model, there are two firms and each firm selects a quantity to produce, and the resulting total output ...
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 ...