ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An oligopoly (from Greek , oligos “few” and , polein “to sell") is a market structure in which a market or industry is dominated by a small number of large sellers or producers. Oligopolies often result from the desire to maximize profits, which can lead to collusion between companies.

Detailed explanation-2: -Oligopoly describes a market dominated by a few large, profitable firms. Collusion is an agreement among members of an oligopoly to set prices and production levels.

Detailed explanation-3: -In an oligopoly, a group of companies (usually two or more) controls the market. However, no single company can keep the others from wielding significant influence over the industry, and they each may sell products that are slightly different.

Detailed explanation-4: -Oligopolists earn their highest profits if they can band together as a cartel and act like a monopolist by reducing output and raising price. Since each member of the oligopoly can benefit individually from expanding output, such collusion often breaks down-especially since explicit collusion is illegal.

Detailed explanation-5: -An oligopoly refers to a market with only a few sellers. Monopolistic competition refers to situations where there are many sellers, but the products are highly differentiated. There are several important nuances to explore between these types of markets.