Oligopoly: meaning, definitions and examples

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.

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.