Question

Why no of firm is limiyed in oligopoly market explain?

Answer 1

The firms involved in oligopoly are less is because usually the capital that has to be invested in such markets are huge. The risk and profit also fluctuates too much that the policy and pricing of one firm can affect the whole players involved in the market.
*OR* When the number of firms are less, its called an oligopoly market. Now why are the number of firms less in such a market. Well, I think the players just started playing early on right from the day the market was born. Or you can say that the market was made by them, a few of them And they dominated so well, people got used to them and whenever they are in need of a product only one particular brand or a few particular brands come into their mind. Another reason the firms involved in oligopoly are less is because usually the capital that has to be invested in such markets are huge. The risk and profit also fluctuates too much that the policy and pricing of one firm can affect the whole players involved in the market.

An example I can point out is the Indian telecom industry. What happened when Reliance Jio came into the field. The losses on other telecom firms where huge. They immediately had to play accordingly. Now if you see the pricing of Airtel or Idea or Vodafone, they are competitive enough to Jio. But still, do you think a new firm can randomly grow out of no where, lets say a 5G service. No. Because the investment involved is huge. And the present players are so established that they have the infrastructure, they have the man power, they have the experience and they are ready to compete