ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An oligopoly is when a few companies exert significant control over a given market. Together, these companies may control prices by colluding with each other, ultimately providing uncompetitive prices in the market.

Detailed explanation-2: -Oligopoly markets are markets dominated by a small number of suppliers. They can be found in all countries and across a broad range of sectors. Some oligopoly markets are competitive, while others are significantly less so, or can at least appear that way.

Detailed explanation-3: -By controlling prices, oligopolies are able to raise their barriers to entry and protect themselves from new potential entrants into the market. This is quite important, as new firms may offer much lower prices and thus jeopardize the longevity of the colluding firms’ profits.

Detailed explanation-4: -UNDER OLIGOPOLY An oligopolist cannot assume that its competitors will not change their price and/or output if it changes. Price change by one firm will be followed by other competitors, which will change the demand conditions facing this firm. Therefore, demand curve for any firm is not fixed like other markets.

Detailed explanation-5: -Oligopolies can nevertheless have fierce pricing competition among their members, especially if they want to expand their market share. Oligopolies exist when firms compete with one another to reduce costs and gain market share. A common aspect of oligopolies is the ability to engage in price competition selectively.