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4. Oligopoly

An Oligopoly is a market structure in which a few large firms dominate the market. These firms are interdependent, meaning the actions of one firm can significantly impact the others.

Characteristics:

  • Few dominant firms.
  • Products may be homogeneous or differentiated.
  • High barriers to entry.
  • Firms often engage in collusion or price wars.

Real-Life Example:​

The automobile industry is an example of an oligopoly. A few large firms like Ford, Toyota, and Honda dominate the market, and their pricing and production decisions impact the entire industry.