How Oligopoly is defined in economics

It is a market dominated by only few suppliers and a situation where there are two suppliers of any good or product is known as duopoly. Goods produced by these firms or companies can be homogenous in nature.e.g. mobile phones etc. and can also be different such as wall clock and cold drinks etc.

Characteristics:

Following are the few characteristics of oligopoly:

Entry Barriers:

Oligopoly firms set up different entry barriers to stop the entry of new firms in the industry.

Non Price Competition:

Firms in oligopoly situation do not compete on price. They sale their products by heavy advertisement, offering special offers, after sale services etc.

Number of Producers:

In oligopoly there are just few producers in the market.

Price Interdependence:

Firms under oligopoly are interdependent on each other regarding price output decisions.

Price Cartels:

Suppliers influence supply or price of the product this association of suppliers is known as cartel.

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