Question

What do you mean by Oligopoly?​

Answer 1

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Explanation:

Introduction:

There are four forms of market :

1. perfect competition market
2. monopolistic competition
3. Monopoly-single seller
4. oligopoly-few seller

Above 2,3 and 4 are called imperfect form of market .

come to the point->>

Oligopoly

It refers to a market situation where there are few sellers.

example : oil industry , automobile industry

Features of oligopoly

●$\underline{Few\: firm }$: The number firms is very less in oligopoly each firm produces a significant portion of total output.

example: cement industry,steel industry.

●$\underline{Inter -dependence :}$ under oligopoly firms are inter dependent which means actions of one firm affects the action of other firms.A change in price by one firm denominate reaction from other firms.

example : In car industry any change by TATA in its vehicle will denominate other firms e.g maruti suzuki to make changes in their vehicles ,price or quality.

●$\underline{Price\:Rigidity:}$ Generally prices are set at similar or constant level to avoid price war.

●$\underline{Product:}$The Product may be homogeneous (steel , cement etc) or differentiated (car )

●$\underline{Barriers \:to\:entry \:of\:firms:}$Entry of new firms in the market is difficult

It requires huge capital to control over resources.

This are the some reasons which stops new firms to enter.