Features Of Oligopoly

Features Of Oligopoly
Introduction What is Oligopoly? The word oligopoly has been coined from the Greek words: "Oligi" means few "polein" means to sell. Thus,
Oligopoly is a market scenario which comprises of few sellers (more than 2) of differentiated or homogenous product. Features of Oligopoly Main
features of oligopoly are as follows – 1.Small numbers of firms – The number of large firms dominating the market are few. 2.Interdependence– Since
the No. of Firms are few, so the action taken by one firm would definitely affect the other firms as well. A change in price can evoke reaction from
other firms. 3.Non–price Competition – A change in price by one firm will bring reactions from other firms. To avoid price wars, a policy of price
rigidity is followed. Firms rely on advertising, better...show more content...
Non–Collusive Oligopoly – When there are no agreements between the companies in the oligopoly market, then it is called Non–collusive Oligopoly.
Herfindahl–Hirschman Index (HHI) Herfindahl–Hirschman Index is a degree of concentration of few large firms dominating an industry. It is
calculated as the sum of squares of market shares of the firm within the industry. Here the market shares are expressed in percentage or in
fractions. Its range lies between 0 to 1.0, in other words it moves from huge number of small firms in an industry to a single monopolistic producer.
As HHI increases it shows a decline in competition and increase in market power. In case percentage is used for calculation the index range changes
from 0 to 10000 points. Eg. Index of .4 = 4000 points. Formula: In India, industries such automobiles, cement, steel, cold drinks, cigarettes etc are
examples of oligopolistic market. All these industries have few firms for each product. In this report we would be analysing the market share of
cigarette industry and cold drink industry in India and calculate their HHI as well as forecast next year's market share. Discussion about Oligopoly and
HHI in Indian
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Oligopoly Essays
Oligopoly is a market structure in which only a few sellers offer similar or identical products. It is an intermediate form of imperfect competition.
OPEC is an epitome of Oligopoly.
Features of Oligopoly:
Non Price Competition
Interdependent decision making
Entry Barriers
If organizations behave in cooperative mode to mitigate the competitions amongst themselves it is called Collusion. When two or more organizations
agree to set their outputs or prices to maintain monopoly it is called as collusive oligopoly.
OPEC acts as a cartel. If OPEC and other oil exporters did not compete, they could ensure much higher prices for prices for everyone. Output quotas of
its members produced staggering price increases (from $1.10 to...show more content...
On one hand domestic consumption was encouraged and production was discouraged resulted in additional demand for oil from
OPEC and the United states inevitably became more dependent on imported oil during the 1970s.
Perfect Collusion Model:
OPEC recognized their interdependence & decided to collaborate in the matter of pricing their product (Oil). There will be one market demand
function (AR & MR) and many cost functions (AC and MC) as the number of competing countries in the OPEC. So various MC curves can then be
summed up horizontally to get the combined MC (CMC). The point where CMC and MR curve intersect gives the point of maximum profit output.
AR curve will give the equilibrium price. The distribution of industry output among countries would be obtained by equating MR=MC through a
horizontal straight line passing through the point of intersection between CMC and MR curves.
Below is the diagram of Homogeneous oligopoly pricing under perfect collusion:
OPEC output and prices are shown in last part (d) where CMC was obtained by horizontal sum up of MC1 ,MC2 & MC3 i.e. the marginal costs.
AR and MR represent demand and corresponding marginal revenue curves of the OPEC as a whole. OPEC output OQ is divided among the partner
countries as in diagram shown say three as Oq1, Oq2 & Oq3. The sum of these outputs equal OPEC output OQ by construction. Each of the country
sells oil at an uniform price equal to OP which is determined in diagram part (d).

Though

Effect of Oligopoly on Economy
OLIGOPOLY
INTRODUCTION
In this topic the oligopoly form of market is studied. You will learn that fewness of firms in a market results in mutual interdependence. The fear of
price wars is verified with the help of the kinked demand curve. Collusive forms and non–collusive forms of market are analyzed. The economic effect
of the oligopoly form of market is presented.
OLIGOPOLY CHARACTERISTICS
The oligopoly form of market is characterized by
– a few large dominant firms, with many small ones,
– a product either standardized or differentiated,
– power of dominant firms over price, but fear of retaliation,
– technological or economic barriers to become a dominant firm,
– extensive use of nonprice competition because of the fear of
price...show more content...
Such a concerted and deliberate action is the form of collusion which is prohibited. OLIGOPOLY PROFIT
The profit of firms in oligopoly is determined exactly in the same fashion as in other forms of markets: from optimum quantity where marginal revenue
equals marginal cost, price is determined on the demand curve and unit cost on the average total cost curve. However, this determination may be
affected by the kinked demand curve. Furthermore, in a collusive oligopoly, all the firms act as if they constituted one monopoly and the output is
divided up among firms.
OPEC acts as a monopoly by restricting output of its members with quotas. Each member shares in the profits of the would–be monopoly, but does not
set price and output independently.
CARTEL
A cartel is an official agreement between several firms in an oligopoly. The agreement sets the price all firms will charge and often specifies quotas or

market shares of the various firms. Cartels are illegal in most countries of the world.
OPEC is a major example of a cartel. It exists because it is beyond the control of an individual country.
OPEC is naturally the prototype of a successful cartel. Output quotas of its members produced staggering price increases (from
$1.10 to $11.50 per barrel in the early 1970's, and up to $34.00 in the late 1970's: an increase of 3400% in ten years). Recent
OPEC difficulties are also characteristic of cartels: new

Main Features Of Oligopoly
Oligopoly:
Oligopoly is a type of imperfect competition, wherein there are few sellers dealing either in homogeneous or differentiated products. The term
oligopoly has been derived from the two Greek words, oligoi means few and poly means control. Thus, it means the control of the few organisations in
the market.
For example, oligopoly in India exists in the aviation industry where there are just a few players, such as Air India, Indigo, Spice Jet, Jet Airways, etc.
All these airlines depend on each other for setting their pricing policies. This is because the prices are effected by the price of the competitors' products.
Features and Pricing Strategy among oligopolistic firms: o Existence of few sellers:
One of the primary features of oligopoly...show more content...
This implies that organisations may either produce homogeneous products, such as cement, asphalt, concrete and bricks, or differentiated products such
as an automobile. If organisations produce homogeneous products, it is said to be pure oligopoly.
oImpediments in entry:
Other important characteristics of oligopolistic competition is that neither organisations cannot easily enter the market; nor they can make an exit from
the market. The reasons for difficult entry in the market are various legal, social and technological barriers. This also implies that the existing
organisations have a complete control over the market.
oEnhanced role of government:
Under oligopolistic market structure, the government has a greater role as it acts as a guard to anti–competitive behaviours of the oligopolists. It is
often observed that oligopolists may engage in the illegal practice of collusion, where they together make production and pricing decisions. Oligopolists
may start acting as a single organisation and further increase prices and profits. Thus, in such environment, the government requires to keep a watch on
such activities to curb the illegal

Verizon Oligopoly
In business, market structure plays an important role, which helps to shape the competitive landscape for businesses at all levels. Each business
industry will naturally form a market structure that comes in numerous forms: Perfect competition, monopolistic competition, oligopoly, or monopoly.
Verizon Wireless is a well–known communications company and large enough to affect the market. Oligopoly is defined as a market in which only a
few firms dominate, and judging from Verizon competition there are only a few firms involve: T–Mobile, AT&T and Sprint. With only few
competitors involve the barrier to entry is high, but there still lies a large pool of customers. The barriers are high because of the amount of money that
has to into the infrastructure

Oligopoly Versus Monopoly Competition Essay
i. Module Code : FC006 ii. Group : D iii. Module Title : Economics in an International Context iv. Assessment Title : Essay v. Assignment Title :
Differences between oligopoly and monopolistic competition market structures. vi. Tutor name : Hind Francesca vii. Student ID : 200893206 viii.
Date of submission : 15/3/2012 ix. Word Count : 986
Differences Between Oligopoly and Monopolistic Competition Market Structures
Market structure refers to the interconnected characteristics of a market, which include the number of firms, level and forms of competition and extent
of product differentiation (Business Dictionary, 2012). Based on these parameters, several market structures are defined and this essay...show more
content...
In short run, the firms can set the price high to obtain supernormal profit (represented by shaded region in Figure 2A). As the abnormal profit they
make in short run attracts many potential rivals, the firms must then set the price low to stay competitive in long run (Figure 2B). For example, in
Canada, the price of personal computers was very expensive when they were first introduced into the market, but as the number of computer
manufacturers increased, the price of personal computers has been declining over the past decade (Figure 3; Statistics Canada, 2011).
B
B
A
A
Cost
Cost
Price
Price

Figure 2. (A) Profit maximisation in short run in monopolistic competition. (B) Normal profit making in long run in monopolistic competition (Bized,
2001).
Figure 3. Change of computer price by different purchasers. (Statistics Canada, 2011).
Mode of competition is also different between the firms in oligopoly and monopolistic competition. Oligopoly is characterized by imperfect
competition, mainly due to high barriers for entry to market (Economics Online, 2012). This is due to various reasons including exclusive resources
ownership, extensive relevant knowledge, patent and copyright, other government restrictions, managerial challenge and high start–up cost (Economics
Online, 2012; Amos Web, 2012). Airline industry is a typical

Strengths And Weaknesses Of Oligopoly Market
Well first thing first Oligopoly is one types of market which is imperfect shape of market, it's only consist of few sellers/firms/actors provide
similar product where one another can control the price with one or several of them act as price leader that have the largest market share. As the
characteristics of Oligopoly market it's quite competitive to be active in this kind of market, they requires efficiency in big scale since profit can
only be created if the company is able to achieve efficiency levels. Then it's derived again to Technical Effeciency where they have to place the
resource optimaly, and Economic Efficiency, how they arrange their cost in market, so that their product can accept well by the market and producer.
Based on the explanation earlier, it brings out several weaknesses, and one of them is the inequality of welfare distribution. This...show more content...
Modern retail business in Indonesia is growing more rapidly with the progress of the Indonesian economy. Indonesia's economic progress has
encouraged the development of modern markets and the retail business in Indonesia. The growth of the middle class in this country encourage
increased investment interest and passion of shopping in modern retail. Modern or modern retail market in addition to providing attractive shopping
alternative also offers the convenience and quality products, competitive prices and sometimes even cheaper than traditional market / retailers. The
modern market has a self–service system, selling various kinds of goods at retail in the form of minimarket, supermarkets, department stores,
hypermarkets or wholesalers. As we recall several months ago, cames out phenomena of Alfamart and followed by Indomaret proliferation in not only
big Cities in Java, but also in either big or small Cities in entire Indonesia. In just short time now we can see every small kilometers distance there are
both; even in City Walk President University there are two Alfamart and one

Barriers Of Oligopoly
2. Economic Theory
2.1Oligopoly
Oligopoly is a market structure in which a few firms dominate the market (Jocelyn Blink & Ian Dorton, 2012). The market may have a large number
of firms or just a few, but the important idea is that the industry's output is shared by a small number of firms. It is possible for oligopolistic
industries to differ, in the sense that some industries would produce the same kind of products, where the product is practically the same and only the
companies name is different. On the other hand, there are also industries that produce completely different product and also ones that produce
products that are only a bit different from each other, but these firms do tend to spend most of their budgets to advertise their products (Jocelyn Blink
& Ian Dorton, 2012). There are a few main characterises of firms that operate as oligopolies these include:
1.Interdependence
2.Strategy
3.Barriers to entry o Natural barriers o Artificial barriers
When economists determine the competitiveness of market they usually look at the assumptions of the different market structures. The same...show
more content...
These obstacles are known as barriers to entry. There are generally two types of barriers to entry that exist, these are natural and artificial. Natural
barriers can be exploited by the major firms and the artificial barriers can be used belligerently to stop other firms from joining the market.
Natural Barriers to Entry:
Economies to Scale
Larger firms tend to have lower cost compared to smaller firms, due to the fact that they are able to gain from economies of scale, but it is possible
for larger firms to experience diseconomies of scale. As firms increase their production scale they tend to lower their production cost and move to the
long run, this can be represented using the diagram

Oligopoly
This paper will focus on the behaviour of oligopolists and the situations they are confronted with in their daily business.
The paper is divided in three parts. The first part explains the basic keywords. The second part tries to explain the nice and the sad sides of an
oligopolist, and will discuss the consequences of their behaviour.
As well, I will try to examine the statement "being an oligopolist is not easy", and whether it is true or whether the truth lies in between.
Aspects of Market Structure
The four types of market structure are listed in the drawing below:
Characteristics of an oligopoly
Definition
Oligopoly is a type of imperfect competition with a market structure, that has only a small group of...show more content...
An oligopoly is a form of economy. Using the four–firm concentration ration, an oligopoly is defined as a market in which the four–firm concentration
ratio is above 40% according to Wikipedia.
In more general terms, a way of measuring market share is to look at the concentration ratio (CRN): The N–firm concentration ratio is the percentage
of market output generated by the N largest firms in the industry. We already covered the most used– CR4 – percentage of sales of the 4 top firms in
the industry.
One measure of this ratio is the 5 firms concentration ratio which shows the market share of the 5 largest companies.
Normally an oligopoly exists when the top five firms in the market account for more than 60% of total market demand/sales. Relating to the index

featured above, the market share for standard and emissionsВґ test remained approximately at over
98,76 % for the 5 top market players ( Dekra, TГњV, GTГњ, KГњS, FSP), so the company in which I work is an oligopolist.
Oligopolical games as a Prisoners' Dilemma
For understanding the function of oligopoly games, we need to define the game of prisonersВґ dilemma. It is a game between two captured prisoners
that illustrates why cooperation is difficult to maintain even when it is mutually beneficial.
The oligopoly game is based on the prisonersВґ dilemma. It turns out that the game oligopolists play in trying to reach the monopoly outcome is similar
to the

Monopoly: Market And Oligopoly
Monopoly is the dominance of just one seller in the market and oligopoly is an economic situation where many sellers populate the market. Netflix
is one of the most popular and dominant in streaming services. It basically provides identical service which people could subscribe to their service
and allow individuals to stream any movies online. Netflix is oligopoly competition because it is a paid online video service with few competitions.
Some of the competition are Amazon, YouTube, DVDs, and streaming online. New firms will be finding a tough time to enter the market due to
economies of scale. Netflix is developing current ways to take over the market share. Netflix is simple and easy to use with no commercials and
affordable services. Netflix

Part 3
3.1 Advantages and Disadvantages of being an Oligopoly for Firm One of the advantages that being an Oligopoly for the firm is making large
profits. Since there are fewer players in the market, the firms which are involved in the market have the potential to bring a lot of profits. It is
generally highly needed or wanted by the large majority of the population when the services and goods that are controlled by oligopolies. For
example, Marlboro is the best selling brand of cigarettes in the world and it is also counted as the 27th of world's most valuable brands. Smokers
are generally loyal towards brand and taste of cigarettes, they would choose Marlboro cigarettes as their choice if they prefer it and this will satisfy
their needs. In our country, Marlboro and Dunhill's price are can be sold almost at the same price because of their branding. Besides,...show more
content...
Price competition can use discounting the price of production to increase the market share. In an oligopoly, there are less risky in the non–price
competition. As an example, Marlboro and other brands of cigarette have their own ways to advertise their product and through this advertisement,
customers can compare and choose the product they prefer. Furthermore, because of the imperfect competition, there are many different branded goods
are selling for customers in oligopoly industry so there are many choices for customers and the welfare is increased. It brings a lot of benefits for the
customers (Anderton, 2008). For instance, there are many brands of cigarettes are promoted in the market such as Dunhill, Salem, Mild Seven, Kent,
Perilly's, Winston and

The Pros And Cons Of Oligopoly
The term oligopoly is derived from two Greek words: 'oligi' means few and 'polein' means to sell. Oligopoly is a market structure in which there are
only a few sellers (but more than two) of the homogeneous or differentiated products. So, oligopoly lies in between monopolistic competition and
monopoly. It can be simply understood as a market structure which dominate by a few large firms, unlike the monopoly market structure where there is
only one dominant firm controlling the market. Oligopoly has high barriers to entry, there is no exact limit to the number of firms in an oligopoly, but
the number must be low enough that the actions of one firm significantly impact and influence the others. Although only a few large firms dominate, it
is possible that many small firms may also operate in the market.
Oligopolies are all over the place, some of the common industry that showing the oligopoly system are usually in cable television services, airline
industry, mass media, computer and software industry,...show more content...
In oligopolies, the changing of price from one of the large firms will affect the others. In terms of the distribution of public revenues, an oligopoly
market often lead to injustice, in the long term oligopoly producers tend to get excess profits, while producers who are in perfect competition is not
going to gain as much. The prominent effect is that oligopolistic producers could form a market system to prevent the entry of new potential producers
into the market, by excluding potential competitors in the market, oligopolies have the power to control supply, demand and market pricing. This not
only puts smaller businesses at a disadvantage in the market but also means consumers are subject to whatever these companies decide. Oligopolies
tend to "steal" smaller businesses costumers which causing the decrease number of profits for small businesses and even put an end to those who is no
longer can

Oligopoly : Concept Of Oligopoly
4
Running head: OLIGOPOLY
Concept of Oligopoly Domestic aviation market in the United States is the best example of demonstrating oligopoly. From a recent incident the
United Airlines dragged one of its passengers out of the plane due to overbooking. The incident rightly represented the treatment being given to the
economy class passengers. The main reason for such incident is the market power. According to the statistics in the year 2016, it was noted that
combined shares of the 4 leading airlines in the US were 68% however the current market shows that the shares rose to 80%. (Prijs, 2017)
Oligopoly could be defined as a type of market structure that involves few producers. In this market structure all these small firms compete...show more
content...
For instance the US airlines have hundreds of sub–airlines that flies between a common destinations. So, when we see these airlines there is no
competition seen however there are only 2–3 main airlines like American and United that are competing with each other. So, to understand oligopoly
it is necessary to look ahead with its understanding rather than just jumping on the conclusion when a subsidiary of the firm is seen. The simplest case
of understanding oligopoly is duopoly where an industry has only two small firms and they get higher profit if they limit their production and
increases their prices. The increased return is the main reason for the prevalence of oligopoly among the big firms. (Prijs, 2017)
It is quite challenging to know about oligopoly by looking at the market structure of an industry. Sometimes the industry may have some of its subtypes
but it may not use it for the profit. For instance, US may have hundreds of airlines but its not necessary that the entire airline in US for the same
destination are competing with each other. There could only be one or two major airlines that may compete with each other like American and United.
Herfindahl–Hirschman Index It is one of the criteria used by economists to have a better idea about the market structure of a company. It is usually
defined as the sum of the squares of market shares of the sub–industries of a firm. Like if a company has 3 sub industries with

The marketplace consists of four main structures: perfect competition, monopolistic competition, oligopoly, and monopoly.
Perfect Competition
A perfectly competitive market system was best described by Keynes (1927): "[laissez–faire] [i] implies that there must be no mercy or protection for
those who embark their labor in the wrong direction (Honja, 2015). It is a method of bringing the most successful profit–makers to the top by a
ruthless struggle for survival, which selects the most efficient by the bankruptcy of the less efficient (Honja, 2015).
Perfect competition is an idealized market structure that realizes an effective distribution of resources. This proficiency is attained for the reason that
the profit–maximizing quantity of output produced by a perfectly competitive firm results in the equivalence between price and marginal cost. In the
short run, this encompasses the equality between price and short–run marginal cost. In the long run, this is seen with the equality between price and
long–run marginal cost at the minimum efficient scale of production.
The environment for perfect competition, includes: (1) large number of small firms, (2) identical products sold by all firms, (3) freedom of entry in to
and exit out of the industry, and (4) perfect knowledge of prices and technology, ensure that perfect competition efficiently allocates resources (Honja,
2015) (5) no governmental interference (6)

Oligopoly Assignment
Name of the student : Dinesh racharla Student Id : kac3159 Individual Assignment 1
Table of Contents
Introduction2
Discussion2
Types of market2
Perfect competition2
Monopoly3
Oligopoly3
Duopoly3
Rising Capital...show more content...
(Eds.). (2013). Environmental policy and market structure (Vol. 4). Springer Science & Business Media.
Cowling, K., & Tomlinson, P. (2012).Monopoly capitalism. Oxford University Press.
Dunne, T., Klimek, S. D., Roberts, M. J., & Xu, D. Y. (2013). Entry, exit, and the determinants of market structure. The RAND Journal ofEconomics,
44(3), 462–487.
Elfenbein, D., Fisman, R., & McManus, B. (2014).
Market Structure: Meaning, Characteristics and Forms | Economics. (2014). YourArticleLibrary.com: The Next Generation Library. Retrieved 25 April
2016, from http://www.yourarticlelibrary.com/economics/market/market–structure–meaning–characteristics–and–forms–economics/28736/
Perfect Competition, the Profit Criterion, and the Organiza–tion of Economic Activity
Ramli, D. (2015). Optus chief predicts telecommunications duopoly with Telstra. The Sydney Morning Herald. Retrieved 25 April 2016, from http:/
/www.smh.com.au/business/australias–phone–and–internet–market–could–become–duopoly–says–optus–chief–20150604–ghgm5b.html
Wang, X. H., & Zeng, C. (2014). A Note on Endogenous Heterogeneity in a Duopoly (No. 2015
–02). School of Economics, Shandong

Essay on Oligopoly
An oligopoly describes a market situation in which there are limited or few sellers. Each seller knows that the other seller or sellers will react to its
changes in prices and also quantities. This can cause a type of chain reaction in a market situation. In the world market there are oligopolies in steel
production, automobiles, semi–conductor manufacturing, cigarettes, cereals, and also in telecommunications.
Often times oligopolistic industries supply a similar or identical product. These companies tend to maximize their profits by forming a cartel and
acting like a monopoly. A cartel is an association of producers in a certain industry that agree to set common prices and outputquotas to prevent
competition. The larger the cartel,...show more content...
A few examples of obstacles that need to be overcome are that of the Trade Practices Act, which states that any unfair or deceptive trade by a business
is illegal, and also difficulty in getting price agreement because of different costs or a large number of firms in the oligopoly. A current example of an
oligopoly would be that of the Viacom/CBS merger. Viacom had proposed a $37 billion deal with CBS that would unite both of these media
industries. The new Viacom would be one of only nine massive, diversified corporations–all of which took their present shape in the last fifteen years.
These media giants include Time Warner, Disney, Rupert Murdoch's News Corp., Viacom, Sony, Seagram, AT&T/Liberty Media, Bertelsmann, and GE.
This oligopoly would never have passed legal convention if the regulators at the Federal Communications Commission and in the antitrust division of
the Justice Department were doing their jobs, or if the Telecommunications Act of 1996 were not railroaded through Congress. These regulators have
let these mergers slide, under intense pressure from the telecommunications and entertainment industry. Microsoft, the biggest Software Company in
the world, has been through a lot of debate of whether they have a monopoly and have the ability to establish an oligopoly industry. Microsoft
Corporation has the ability to control software prices in the market. They have in a way an oligopoly in this industry. If Microsoft decides to lower

Oligopoly Market
Introduction
As we can see, this assignment requires us to have an understanding on the oligopoly market, which is one of the most sought after market condition
which is being applied in many sectors, including banking, airline and car industry. Many large organizations are involved in merger and acquisition
to strengthen its position besides expanding their market share. As example, Hong Leong Bank completed a takeover on EON Bank to consolidate its
position as one of the major bank in Malaysia (Bloomberg, 2011).
Oligopoly market is defined as a market that consists of a small number of large players (Begg & Ward, 2009). In Malaysia,airline and banking industry
are two industries that have small numbers of large players. As we can...show more content...
Today,AirAsia has flown over 55 million guests across the region and continues to create more extensive route network through its associate
companies. Its affiliate airlines Thai AirAsia and Indonesia AirAsia have hubs in Suvarnabhumi Airport and Soekarno
–Hatta International Airport
respectively (AirAsia, 2011).
AirAsia believes in the no–frills, hassle–free, low fare business concept and feels that keeping costs low requires high efficiency in every part of the
business. Through the corporate philosophy of "Now Everyone Can Fly", AirAsia has sparked a revolution in air travel with more and more people
around the region choosing AirAsia as their preferred choice. AirAsia won the Skytrax World's best low
–cost airline award in 2009, 2010 and 2011
(Skytrax, 2011). It has the world's lowest operating costs at $0.035/seat–kilometre in 2010. It is also the first airline in the region to implement fully
ticketless air travel system.
Is Airline Industry in Malaysia considered as Oligopoly Market?
As we go through further in this assignment, a question will remain in our mind, whether airline industry is an oligopoly market. It is important for us
to understand the characteristic of airline industry to have more understanding on the market.
Based on the characteristic of oligopoly market, it stated they produced homogenous or differentiated products. We could see that AirAsia is
differentiating themselves through low cost, even

An Oligopoly Market Essay
Introduction It cannot be denied that oligopolies are widespread all over the world. The Cambridge Dictionary (2016) defines oligopoly as 'a
situation in which a small number of organizations or companies have control of an area of business, so that others have no share'. An example is the
smartphone market are dominated by Google's Android and Apple's iOS. It has been reported that the market share of Android is nearly 80 percent,
while iOS's market share is about 15 percent in 2015 (Olenick, 2015). The main characteristic of oligopoly is the interdependence of firms, which leads
to strategic uncertainly. Companies need to consider their rivals' possible reactions when setting price and output so there is not a known outcome.
Basically, there are many models that can analyse this uncertainly such as Cournot Model and Stackelberg Model. In this essay, I will outline the nature
of uncertainly in an oligopoly market in which firms set output levels, then use different models to analyse this uncertainly as well as examine the
influence of a cartel.
Oligopoly uncertainly It is believed that firms have to take into account the actions of customers and other producers to any shift in price and output
thus it gives rise to oligopoly uncertainly. Consider a market in which the companies confront the identical market price. Let the inverse market
demand curve be p = p(q) = p(qA + qB). Firm A needs to consider the impact of its output on the market price to determine its profits

Features Of Oligopoly

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