Difference between revisions of "Oligopoly"

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An oligopoly is an industry or market dominated by a 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.
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An '''oligopoly''' is a [[market]] with only a few sellers, who [[collude]] together to create [[Barrier to entry|barriers to entry]] against new competitors.  An oligopoly lacks full [[competition]] and [[consumer]]s may suffer as a result.
  
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It is to be noted that Democrats often attempt to position themselves against oligopolies, despite having accepting large sums in donations from, them, one of the most notable being contribution totaling over $48,000,000 from the oil company oligopoly. However, Republicans endorse heavily the idea of oligopolies such as the Oil industry, because these companies define the very basic core of capitalism, all while helping the average citizen.
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Described another way, an oligopoly is an [[industry]] or market dominated by only a 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]].
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Even if there is no collusion, the lack of competition may cause price to rise above marginal cost, where it would be if there were more firms, as competition forces prices down as firms undercut each other.
  
 
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.
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The retail gasoline market is a good example of an oligopoly because a small number of firms control a large majority of the market.
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[[Category:Economics]]

Latest revision as of 04:39, August 8, 2018

An oligopoly is a market with only a few sellers, who collude together to create barriers to entry against new competitors. An oligopoly lacks full competition and consumers may suffer as a result.

Described another way, an oligopoly is an industry or market dominated by only a 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.

Even if there is no collusion, the lack of competition may cause price to rise above marginal cost, where it would be if there were more firms, as competition forces prices down as firms undercut each other.

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.

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