Oligopolies are market structures characterized by a small number of large firms that dominate the industry. These firms have significant control over prices and can influence market outcomes.
Imagine a group of friends who are the only ones selling a popular product at school. They work together to set high prices and limit competition, making it difficult for others to enter the market.
Barriers to Entry: These are obstacles that make it challenging for new firms to enter an industry, such as high startup costs or government regulations.
Collusion: This refers to when firms in an oligopoly secretly cooperate with each other to reduce competition and increase their profits.
Price Leadership: In some oligopolistic markets, one firm takes the lead in setting prices, and other firms follow suit.
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