*Economics* Oligopolistic Uncertainty

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“Oligopolistic interdependence creates uncertainty, which in turn may promote collusive action”
Oligopoly is a specific type of market within business. The markets within an oligopoly are controlled by a small number of large and powerful companies; contrast to a monopoly (where the market is controlled by a single company, allowing it full control of the market and its respective conditions – e.g. price & availability) and perfect competition (where numerous businesses of parallel aptitude are providing homogeneous goods and services, at coinciding or differing prices and availability).

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“Oligopolies dominate the modern economic landscape, accounting for about half of all output produced in the economy.”
One example of such a market that can be described as an oligopolistic market is petrol in the UK. This is because petrol is mainly distributed by a few major companies, such as Shell. Because of this it will be hard for other businesses to enter this market as the barriers of entry are set very high for example the fixed costs are high, this is reinforces the strength of barriers. Another example is due a lack of substitutes.

Other oligopolistic markets include the soft drink market with Pepsi, Coca-Cola and Robinsons dominating the market. The sports footwear market is being controlled by Nike and Adidas with two firm concentration of around 60% [2]. And, finally, the major high street banks; the three largest in the UK are Hong Kong and Shanghai Banking Corporation (HSBC), Lloyds Banking group and Barclays.

Oligopolies do not have a set of black and white rules they operate by. There are many varying and distinctive factors which contribute towards their decision making; such as legal, political, price, cost and the market conditions. Unless a particular event occurs such as a price war, oligopolies function much like a monopoly. Though, oligopoly may be competitive and pursue an independent strategy and compete through price, but

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