Oligopoly

By: Cynthia Yang

Characteristics:

1) In a oligopoly, the market has a few sellers

2) In a oligopoly, the firms sells either identical or similar products

3) In a oligopoly, there are many barriers to enter or exit the market

4) In a oligopoly, the firms will act as a cartel

Advantages vs. Disadvantages

Advantages:
  • Few sellers= More control
  • Competitive prices result when consumers compare prices of different firms
  • Customers can compare which airlines have the cheapest price

Disadvantages:

  • Firms will not improve their business once they have a product because of little competition
  • New firms have trouble entering the market because of many barriers
  • The firm may set the price but at the customers disadvantage because firms might have unaffordable prices

Educational Poll

What are some disadvantages stated in the description of Delta?

A) Since many barriers many are discouraged from entering the market

B) Few sellers

C) Makes money from a lot of travelers