Oligopoly Market Structure

An Oligopoly Market Structure is a market structure characterized by a small number of dominant firms that control market share within an economic market.

• AKA: Oligopolistic Market, Few-Seller Market, Oligopoly.
• Context:
  • It can typically enable Strategic Interaction between competing firms through mutual interdependence.
  • It can typically maintain High Barriers to market entry through economies of scale.
  • It can typically exhibit Price Rigidity through tacit coordination.
  • It can typically generate Supernormal Profits through market power.
  • It can typically support Product Differentiation through brand competition.
  • ...
  • It can often facilitate Collusive Behavior through price leadership.
  • It can often enable Non-Price Competition through advertising strategy.
  • It can often demonstrate Kinked Demand Curve through competitor reactions.
  • It can often maintain Market Stability through strategic equilibrium.
  • It can often influence Economic Competition through strategic pricing behavior.
  • ...
  • It can range from being a Tight Oligopoly Structure to being a Loose Oligopoly Structure, depending on its market concentration ratio.
  • It can range from being a Homogeneous Oligopoly Structure to being a Differentiated Oligopoly Structure, depending on its product characteristics.
  • It can range from being a Collusive Oligopoly Structure to being a Non-Collusive Oligopoly Structure, depending on its firm coordination level.
  • ...
  • It can exist within Economic Markets as a market organization form.
  • It can be analyzed by Economic System Analysis for market behavior patterns.
  • It can affect Economic Factors through pricing mechanisms and output decisions.
  • It can involve Market Participants with significant market power.
  • It can contribute to Market Failure through allocative inefficiency.
  • It can function within Market-based Economies as a common market form.
  • It can be studied using Cross-Price Elasticity of Demand Measures for competitive responses.
  • It can be analyzed through Economic Patterns and System Patterns.
  • ...
• Example(s):
  • Specialized Oligopoly Structures by firm count, such as:
    • Duopoly, with exactly two dominant firms in economic competition.
    • Triopoly, with exactly three dominant firms.
    • Quadropoly, with exactly four dominant firms.
  • Industry-Specific Oligopoly Structures, such as:
    • Automobile Manufacturing Oligopoly Structure with major auto manufacturers.
    • Telecommunications Oligopoly Structure with national carriers.
    • Commercial Aircraft Manufacturing Oligopoly Structure with Boeing and Airbus.
  • Technology Sector Oligopoly Structures analyzed by Automated Financial Trading Systems, such as:
    • Search Engine Oligopoly Structure with technology platforms.
    • Mobile Operating System Oligopoly Structure with software providers.
    • Cloud Computing Oligopoly Structure with infrastructure providers.
  • Regional Oligopoly Structures, such as:
    • National Banking Oligopoly Structure in concentrated banking markets.
    • Local Cement Oligopoly Structure in geographic markets.
    • Retail Gasoline Oligopoly Structure in urban markets.
  • ...
• Counter-Example(s):
  • Monopoly Structure, which has only single seller rather than few sellers.
  • Monopoly Agent, which represents single firm dominance rather than oligopolistic competition.
  • Perfect Competition Structure, which has many sellers with no market power.
  • Monopolistic Competition Structure, which has many sellers with differentiated products.
• See: Market Structure, Economic Market, Economic Competition, Duopoly, Economic Factor, Market Participant, Economic Entity, Economic Act, Market Failure, Market-based Economy, Cross-Price Elasticity of Demand Measure, Economic System Analysis, Strategic Planning, Game Theory, Industrial Organization.

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References

2017

• (Wikipedia, 2017) ⇒ https://en.wikipedia.org/wiki/Oligopoly Retrieved:2017-11-7.
  • An oligopoly is a market form wherein a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher prices for consumers. Oligopoly has its own market structure.

    With few sellers, each oligopolist is likely to be aware of the actions of the others. According to game theory, the decisions of one firm therefore influence and are influenced by decisions of other firms. Strategic planning by oligopolists needs to take into account the likely responses of the other market participants.

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