Economics

Oligopoly

What is an oligopoly?

An oligopoly is a market structure characterized by a small number of firms that have significant market power, allowing them to influence prices and production levels.

Give an example of an oligopoly.

Examples of oligopolies include the automobile industry, where a few major manufacturers dominate the market, and the airline industry.

What are the key features of an oligopoly?

Key features include: 1) Few large firms, 2) Interdependence among firms, 3) Barriers to entry, and 4) Non-price competition.

What is non-price competition in an oligopoly?

Non-price competition refers to strategies used by firms to attract customers without changing prices, such as advertising, product differentiation, and customer service.

What is a price war?

A price war occurs when firms in an oligopoly continuously lower prices to undercut competitors, which can severely reduce profit margins.