Question

Features merits and demerits of oligopoly competition

Answer 1

During oligopoly the products can be easily differentiated.

• Firms have some control on price during oligopoly.
• Price stability within market can be seen during oligopoly.
• In oligopoly incentive to develop new and better products can be observed.
• Greater choices for consumer can be observed in oligopoly compared to monopoly.
• Large firms have strong hold over the market during oligopoly.

Some Disadvantages of Oligopoly are as follows:

• The biggest disadvantage is "High barriers to entry" - Oligopoly.
• High degree of interdependence can be seen between firms during oligopoly.
• Abnormal profits can be made during oligopoly.
• There are very less chances of economies of scale compared to monopoly.
• Costly marketing as well as more extensive advertising is needed in oligopoly.
• In oligopoly small business usually fails to establish themselves because most the market is usually captured by the large firms.

• Firms cannot take individual decisions and they have to consider views of other dominant players in the market

Hope this answer helped you

Answer 2

Answer:

An oligopoly is an industry which is dominated by a few firms. In this market, there are a few firms which sell homogeneous or differentiated products. Also, as there are few sellers in the market, every seller influences the behavior of the other firms and other firms influence it.