By – Vikash Kumar

BA-LLB 1st Sem

 CONTENT

 Meaning
 Types
 Features
 Instance
 Merits
 Demerits
 Conclusion
 Derived from Greek words: “Oligi” means
few and “Polein” means to sell.
 An Oligopoly is a market form in which
Market or Industry is dominated by a small
number of sellers.
 Sometimes, also known as ‘Competition
among the few’ as there are few sellers in
the market and every seller influences and is
influenced by the behaviour of other firms.
TYPES
 Pure or perfect – If the firms produce
homogenous products, then it is called
pure or perfect oligopoly.
 Imperfect or differentiated – if the
firms produce differentiated products.
 Collusive- if the firms cooperate with
each other in determining price or output
or both.
 Non-Collusive- if the firms compete
with each other.
FEATURES
 Interdependence – Firms under Oligopoly are
interdependent.
 It means that action of one firm affect the actions of
other firms.
 Ex – market for cars is dominated by few firms
(Maruti, Hyundai, Mahindra). A change by any
firm(say, hyundai) in any of its vehicle will induce
other firms(Say, maruti, Mahindra) to make changes
in their respective vehicles.
 Few Firms:- there are few large firms. The exact
number of firms is not defined. Each firm produces a
significant amount of total output. Ex – the market for
automobiles in India is an oligopolist structure as
there are only few producers of automobiles.
 Non-Price Competition:- Firms are in position to
influence the prices. They try to avoid price
competition for the fear of price war and follow the
policy of price rigidity. They use other methods like
advertising and better services.
FEATURES

o Barriers to Entry:- Barriers like patents,

requirement of large capital, control over
crucial raw materials prevent entry of new
firms.
o Indeterminate Demand Curve:- The exact
behaviour pattern of a producer cannot be
determined with certainty. That’s why it is
indeterminate(uncertain)
 Oligopoly in Indian Telecom Sector.
 Only Four Major players are
currently operating in the Country
after merger of Vodafone and !dea.
 Jio, Airtel, Vi and BSNL are the
Current Telecom Competitors in
India.
 Only Two Brands, i.e. Jio and Airtel
account for 61% of Total Subscriber Base.

INSTANCE
MERITS
 They adopt a highly Competitive Strategy,
through which they can generate ideal profits.
 They may be dynamically efficient in terms of
innovation and new product and process
development.
 Price Stability may bring advantages to
consumers and the macro-economy because it
helps consumers plan ahead and stabilise their
expenditure.
 High concentration reduces consumer choices.
 Cartel-like behaviour reduces competition can lead to
higher prices and reduced output.
 Firms can be prevented from entering the market
because of deliberate barriers to entry.
 There is a potential loss of economic welfare.
 Oligopolists may be allocatively and productively
inefficient.
CONCLUSION

 An oligopoly may end up looking more like a

Monopoly or Competitive market depending on
the number of firms.
 It depends on the objectives of the firm, the
market’s contestability and nature of product.
 No certainty as to how the firms will compete
in the oligopoly market.
 Thus, oligopoly has emerged as the most
prevalent market form in the industrialised
world.
Ecoworld
Statista
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