Oligopoly is a market situation in which there are a few firms selling homogeneous or differentiated products. Examples are oil and gas.
It is difficult to pinpoint the number of firms in ‘competition among the few.’ With only a few firms in the market, the action of one firm is likely to affect the others.
Very few big firms own the major control of the whole market by producing major portion of the market demand.
The price and quality decisions of a particular firm are dependent on the price and quality decisions of the rival firms.
The firms under oligopoly realise the importance of mutual co-operation.
The oligopolist could raise sales either by advertising or improving the quality of the product.
Perfectoligopolymeanshomogeneous products and imperfect oligopoly deals with heterogeneous products.
It implies that prices are difficult to be changed. The oligopolistic firms do not change their prices due to the fear of rivals’ reaction.