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What is an Oligopoly? What are its main characteristics?

Important banking qna for banking aspirants, which is helpful in banking exam.

Feb 11, 2015 14:26 IST

Oligopoly is a market situation in which only one company exerts control over most of a market. It is a type of market in which few big firms’ accounts for large number of output.

Main Characteristics of Oligopoly

  • Profit Maximization
  • Ability to set price
  • Restricted Entry
  • Few Numbers of Firms
  • Long run profits
  • Product differentiation
  • Perfect knowledge
  • Interdependence
  • Non Price Competition

The retail gas market is an ideal illustration of an oligopoly because a small number of firms control a large majority of the market.