An oligopolistic market is a market structure characterized by a small number of firms that dominate the industry and have significant influence on the market. The main features of an oligopolistic market include:
- Few Firms : In an oligopoly, there are a small number of firms that produce a significant part of the total output. These firms compete with each other and try to manipulate the market
- Interdependence : Firms in an oligopoly are interdependent, meaning their decisions are influenced by the actions and decisions of their competitors. The market outcome depends on the collective behavior of these firms
- High Barriers to Entry : Entering an oligopoly is difficult due to the presence of established firms that dominate the market. High barriers to entry can include high capital requirements, unique technology, or strong brand loyalty
- Product Differentiation : In an oligopoly, firms often differentiate their products from those of their competitors, either through unique features, design, or branding. This allows them to compete non-pricefully and maintain their market position
- Price-Setting Ability : Firms in an oligopoly can influence the price of the product, but they often engage in non-price competition, focusing on factors such as product quality, service, and brand image
- Uncertainty : The behavior of firms in an oligopoly is uncertain, as they must consider the actions of their competitors and anticipate market changes
Examples of industries with oligopolistic market structures include the oil industry, railroad companies, wireless carriers, and big tech
