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Oligopoly Meaning: Definition, Examples, and Translations

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oligopoly

[หŒษ’lษชหˆษกษ’pษ™li ]

Definition

Context #1 | Noun

market structure

An oligopoly is a market structure characterized by a small number of firms that have significant control over market prices. Due to this limited number of competitors, each firm must consider the potential reactions of its rivals when making pricing and production decisions. Oligopolies can lead to reduced competition and higher prices for consumers compared to more competitive markets. There are various models to analyze oligopolistic behavior, including the Cournot and Bertrand models, which describe different approaches to output and pricing strategies.

Synonyms

duopoly, limited competition, monopolistic competition.

Examples of usage

  • The airline industry is often cited as an example of an oligopoly.
  • In an oligopoly, companies may engage in collusion to set prices.
  • Telecommunications markets in many countries operate as oligopolies.
  • The car manufacturing sector is dominated by a few oligopolistic firms.

Translations

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Interesting Facts

Economics

  • In an oligopoly, companies may work together or compete, but their decisions are interdependentโ€”one's choice affects the others.
  • Common examples include the airline, automobile, and smartphone industries, where a few firms dominate the market.

Pop Culture

  • Films like 'The Big Short' expose how a few large entities can influence entire economies.
  • TV shows such as 'Billions' often discuss the power dynamics of big businesses, reflecting real-life oligopolistic behavior.

Psychology

  • In an oligopoly, companies might follow a 'kinked demand curve', where price increases on one product lead to changes in consumer behavior.
  • Behavioral economics illustrates how consumers perceive brands differently within an oligopoly, impacting their purchasing choices.

History

  • Historically, the railroads in the United States during the 19th century are a classic example of oligopoly, involving a few key players.
  • The OPEC oil cartel is a modern instance, where a small number of countries coordinate efforts to influence oil prices globally.

Origin of 'oligopoly'

Main points about word origin

  • The term comes from combining the Greek words 'oligos', meaning 'few', and 'polein', meaning 'to sell'.
  • It was first coined in the early 20th century, around the year 1900, to discuss market structures.

The term 'oligopoly' combines the Greek words 'oligos,' meaning 'few,' and 'polein,' meaning 'to sell.' It first gained prominence in the economic discourse during the early 20th century as scholars began to examine various market structures beyond the classical models of perfect competition and monopoly. The evolution of industrial economies led to increasing concentrations of market power within a small number of firms, spurring interest in the behaviors and pricing strategies of these entities. The study of oligopoly has since become a distinct area in economic theory, integrated into discussions of market regulation, antitrust laws, and economic efficiency. An oligopoly can manifest in various industries, and its implications have profound effects on market dynamics, consumer choices, and economic policy.

Word Frequency Rank

At rank #26,677, this word represents specialized academic or technical vocabulary. It's less frequently encountered but may be valuable in specific contexts.