Why number of firms is limited in an oligopoly market? Explain.
Answers
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.
The number of firms is usually limited in an oligopoly market because there are only some limited firms providing a service or goods in this type of market.
Moreover, in such a market, the capital needed for investment and sustenance is large which very few can afford.
The profits and risks involved in them is also fairly high because the pricing of one firm can affect all the players involved in it.
An oligopoly market can be described as one in which there are a few organizations offering goods or services to consumers.