oligopoler

Oligopoler, or oligopolies, are market structures dominated by a small number of firms that together account for a large share of output. Firms in an oligopoly are interdependent: each firm’s pricing, investment, and product decisions depend on the anticipated reactions of rivals.

Common features include high barriers to entry, such as substantial capital requirements, control of key technologies or resources, network effects, and regulatory obstacles. Markets can involve homogeneous products (for example certain chemicals) or differentiated products (such as automobiles or smartphones).

Competition in oligopolies takes many forms. Price competition can occur, but non-price strategies—advertising, branding, product development, quality of service, and strategic partnerships—are also central. Prices may be stable for extended periods, a consequence of strategic interaction explained by theories like the kinked-demand curve, while other markets experience frequent price changes due to moves by rivals.

Interdependence creates potential for cooperation, ranging from tacit coordination to formal cartels. Explicit price fixing or market allocation is illegal in many jurisdictions, and regulators monitor oligopolies to preserve competition.

Examples include the airline and automotive industries, where a few large players dominate, or large beverage and telecommunications sectors. The welfare impact of oligopolies varies: they can enable economies of scale and innovation, but they also risk higher prices and reduced choices if competition is weak.