Oligopoly - How It Works and Why It Works

Abstract

An oligopoly is a type of a market structure in which there are only a few producers. Oligopolies are prevalent in today’s reality. They are competitive: oligopolists compete with each other for sales, yet they are imperfectly competitive. They do compete for sales, but also possess some market power: the ability to raise market prices. Each oligopolist is not a monopolist, yet it can affect market prices; its decisions about how much to produce affect market prices. Product differentiation is also of utmost importance in oligopolies. In my paper I present the basic analysis of oligopolies.

Keywords: oligopoly, market power