the market where these firms are the buyers and not sellers (e.g.

a
factor market).

Oligopoly is interdependence between firms:

The important characteristic of an oligopoly is
interdependence between firms. This means that each firm must
take into account the likely reactions of other firms in the market
when making pricing and investment decisions. This creates
uncertainty in such markets - which economists seek to model
through the use of game theory.

Oligopolies do not compete on prices:

Oligopolies do not compete on prices. Price wars tend to
lead to lower profits, leaving a little change to market shares.
However, Oligopolies firms tend to charge reasonably premium
prices but they compete through advertising and other promotional
means. Existing companies are safe from new companies entering
the market because barriers to entry to the market are high. For
example, if products are heavily promoted and producers have a
number of existing successful brands, it will be very costly and
difficult for new firms to establish their own new brand in an
oligopoly market.

OPEC :

OPEC is an example of Oligopoly since few countries control the

production of oil, the steel and the automobile industry in United
States of America is another example.

OPEC acts as a cartel. If OPEC and other oil exporters did

not compete, they could ensure much higher prices for prices for
everyone.

Output quotas of its members produced staggering price

increases (from $1.10 to $11.50 per barrel in the early 1970's, and
up to $34.00 in the late 1970's: an increase of 3400% in ten years).
The relative success of OPEC can be attributed to the following
advantages it has enjoyed relative to other cartels:

1. The low price elasticity of oil demand implies that moderate

output restrictions increases price in short run - a favourable
environment for a cartel. In 1973, OPEC output
contributed two-thirds of the total world oil production.

2. In1975 OPEC countries had a substantial market power of 70 %.

3. The effectiveness of OPEC is further enhanced since just four