- What is Oligopoly?
Oligopoly is a market or industry which is dominated by a small amount of sellers. This means that the small amount of sellers all tend to be aware of one another and what business decisions they are all making.
- What are the advantages of Oligopoly?
One of the main advantages of Oligopoly is that the businesses have a lot of control because there are so few of them. Oligopoly businesses will often own more of the market that we see from the outside and if they are the main producer they can also drive their own competition and set standardized prices for a particular company.
Another advantage is that prices can become competitive if the customers are aware of who the main competitor is. It makes it easy for customers to do price comparisons and this forces the companies to set competitive prices.
- What are the disadvantages of Oligopoly?
One disadvantage of an Oligopoly for the customers is if there is only one dominating company. When a company owns a massive share of the market they can almost set the prices to whatever they desire. This means that they can take advantage of the fact that customers have little option than to buy that product from them and may set the prices extremely high. This means that the customer will have to pay more for the product than they would if there were more competitors in the field.
Another disadvantage is the fact that the dominating company can become settled and will not think of new or creative ideas to improve their business. If they have no reason to improve or modernize the product because they have little competition the product will not evolve.