Oligopoly

Oligopoly – Oligopoly is a market in which there are a small number of suppliers who control and dominate the distribution and availability of goods and services, thereby raising the prices of commodities.

There are few sellers in an oligopoly set up and one company’s decision is influenced by others in the market and vice versa. Fierce competition in an oligopoly can result in problems for the common citizens as the sellers might collude and form restrictive trade practices which in turn leads to a rise in prices.

On the other hand, oligopoly can prove to be boon for consumers as fierce competition results in higher production which results in lower rates for good and services. In India, domestic airlines running privately form a perfect example of an oligopoly market.

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Several businesses operate under an oligopoly and as such have some common features such as being a little less concentrated than in a competitive market. Further, in an oligopoly, companies offer usually similar goods and services which leads to perfect competition and forms stability in prices.

Edited and Updated 08th March 2014

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