Question

Outline the fundamental characteristics of oligopoly

Short answer

Emphasis on Advertising: Each vendor attempts to reach out more through advertisements in order to gain a larger share of the market.

Step-by-step solution

Step 1:Introduction to oligopoly 

An oligopoly market is a market system in which more than one Vendor (or firm) trades a specific good, but there are only a few Vendors. Although competition is limited, it is imperfect because one vendor's decision influences the decisions of others in the market. The interdependence of the Vendors is the main feature of this type of Market, which forces them to collaborate and compete with one another in order to control the Market, affecting demand and supply based on prices.

characteristics of oligopoly 

As previously stated, the interdependence of the firms is the main distinguishing feature of this type of Market. Other distinguishing features of the Market are

Group behavior: All firms must collaborate in order to keep the Market system running.

Entry Restrictions

Entry Restrictions: In an oligopoly market, new firms seeking to expand or existing vendors seeking to expand face stiff competition.

Emphasis on Advertising:

Emphasis on Advertising: In order to gain a larger share of the market, each vendor attempts to reach out more through advertisements