What is an Oligopoly?

Think of it like an exclusive club. Only a few companies get to join, and they rule the market together. Now, let's see what makes them so special.

• The Exclusive Club of Few Firms

  • Real-World Example
  • Imagine the smartphone industry; only a few big players like Apple, Samsung, and Google control most of the market.

• Same or Different Products

  • They might all sell the same thing (like oil) or different things (like laptops or mobile phones).

• High Barriers to Entry

  • Imagine a giant wall keeping other businesses out. Things like big startup costs, licenses, and brand names can make this wall almost impossible to climb.

• Interdependence

  • These firms are like best friends. They keep an eye on each other because what one does affects the others.

This is like a report card for the market, telling us how much a few big companies are dominating:

• CR4, CR8, CR20: the higher the number, the more control the big players have.
• Example: In the USA, 4 big cat food companies control 97% of the market. That's like the entire school being run by four students!

Imagine two schoolyard rivals

• Competing: They can try to outdo each other (like a price war), but that might end badly for both.
• Colluding: They can team up and act like a monopoly, but if they get caught, they face penalties.