1.0 Definition of oligopoly
Oligopoly market structure is a market with few seller but large in size and their produce branded product whereby advertising is a very crucial element within the oligopoly market. Thus in the oligopoly market structure the competition between a firm with another firm is very high because they are only a few seller in the market and the price is very stable.
2.0Characteristic of oligopoly market structure:
2.1 Difficult to entry
Oligopoly market a very difficult to enter because they also need a huge amount of capital and the expenses is very expensive. Apart from that they using a high technology in their product. Example of oligopoly market such as airlines, automobile, steel industry and oil industry. 2.2 Similar or differentiate product
In the oligopoly market sometimes they sell similar product such as oil from Saudi Arabia is the same oil in Malaysia and Thailand. For the differentiate product such as automobiles, steel industry, gas, and cell phone. 2.3 Few seller and large in size
Oligopoly market have few seller but they are very big in the economic scale because in their production they produce they product in mass production. Firm that operates in the oligopoly structure can affect the market price the example of this characteristic such as airlines, tobacco, and steel industry.
2.4 Mutual interdependence
These oligopoly market are very easily affected by the action of the other firm this means the action of the other firm will give effect to other firm because they are only a few seller thus the competition is very high. For example if one firm reduces they price the other firm will also have to follow the other firm in reducing they price.