Difference between revisions of "Oligopoly"
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An imperfect oligopoly consists of a few firms in an industry or market, but their product is differentiated, as in the car industry. | An imperfect oligopoly consists of a few firms in an industry or market, but their product is differentiated, as in the car industry. | ||
| − | + | The retail gasoline market is a good example of an oligopoly because a small number of firms control a large majority of the market. | |
[[category:economics]] | [[category:economics]] | ||
Revision as of 02:06, January 18, 2010
An oligopoly is a seller's market having only a few sellers, who enjoy barriers to entry against new competitors. An oligopoly lacks full competition and consumers suffer as a result.
Described another way, an oligopoly is an industry or market dominated by a only few firms selling a similar (undifferentiated) product. This is called a "perfect oligopoly." The few firms can behave in a harmful manner similar to how a monopoly behaves in overcharging customers or otherwise suppressing beneficial competition, since a low number of dominant actors in the market makes it relatively easy for them to collude and form a cartel.
An imperfect oligopoly consists of a few firms in an industry or market, but their product is differentiated, as in the car industry.
The retail gasoline market is a good example of an oligopoly because a small number of firms control a large majority of the market.