Market with few buyers/ sellers & identical/similar products

Oligopolies have many barriers to enter and exit the market

Advantages to a Oligopoly

Good for the Companies:

  • Can have a cartel agreement with the other providers (collude) Have some control over the price of what they are selling
  • Companies make high profits

Good for consumer:

  • The companies all keep in the same price range
  • Colludes keep prices lower or more controlled in some cases

Disadvantages to a Oligopoly

Bad for Companies:

  • Big companies control the market making it hard for smaller companies
  • Lack of a need for a new innovation in company

Bad for Consumer:

  • Consumer has less choice
  • Consumer has fixed prices for all goods


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Cell Phone Companies

  • Small companies not trusted as much as the big name brands
  • People tend to stick to what they know works- makes it difficult to get into the business
  • They all provide cell phone services but each gives a different plan


  • All of them offer the same phones
  • All offer Data, Talk time, and Texting
  • All offer coverage.


  • Different plans for data, talk time, and coverage.
  • Different rates for how much the phone costs over time
  • Some carriers sell certain phones that others don't
  • Different amounts of coverage in different areas

AT&T Specifically as an Example

  • Offers cell phone coverage the same as Sprint and Verizon
  • Offers Apple, Samsung, and HTC
  • THEY set how much you pay for your phone per month
  • Has changed their set up and plans according to their competitors almost in an unspoken collude

Advantages and Disadvantages Example


  • AT&T has around the same prices and deals as their competitors
  • All carry for the most part similar products with similar plans
  • Competition allows for expansion and upgrades ie when all the companies started increasing their coverage area


  • Because they all keep in the same price if AT&T starts to charge more per month they all will
  • You have very little choice in how much you are charged but they make it seem like you do
  • Smaller companies have a harder time getting into the market
Oligopoly (Gangnam Style)

Questions/ Poll

  1. Which is not an advantage to an oligopoly?

A. Cartel agreement benefit businesses.

B. Bigger companies control the market.

C. The companies all keep in the same price market.

D. The consumer has prices all in the same price range for each product.