Oligopoly

An oligopoly is a market structure in which a few firms dominate the industry. In an oligopoly, each firm has some control over the market price due to its size and market power. The firms in an oligopoly are interdependent, meaning that the actions of one firm will affect the other firms in the market. This interdependence leads to strategic behavior among the firms, such as price wars, collusion, and other forms of strategic behavior.

History of Oligopoly

The term oligopoly was first used in the late 19th century by Italian economist Vilfredo Pareto. He used the term to describe the market structure of a few large firms dominating an industry. Since then, the concept of oligopoly has been studied extensively in economics and has been used to describe many different industries, from oil and gas to telecommunications.

In the 20th century, economists such as John Kenneth Galbraith and Joan Robinson developed theories of oligopoly that focused on the strategic behavior of firms in an oligopolistic market. These theories helped to explain the behavior of firms in an oligopoly, such as price wars and collusion.

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Summary

Oligopoly is a market structure in which a few firms dominate the industry. In an oligopoly, each firm has some control over the market price due to its size and market power. The firms in an oligopoly are interdependent, meaning that the actions of one firm will affect the other firms in the market. This interdependence leads to strategic behavior among the firms, such as price wars, collusion, and other forms of strategic behavior. For more information about oligopoly, visit websites such as Investopedia, The Balance, and the Federal Trade Commission.

See Also

• Monopoly
• Monopolistic Competition
• Perfect Competition
• Price Discrimination
• Price Fixing
• Collusion
• Game Theory
• Strategic Behavior
• Market Power
• Market Structure

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