Oligopoly

Oligopoly is an economic term for a market structure which involves only a small number of sellers or providers. An oligopoly can occur in such segments of the market which are very difficult to enter for new, emerging firms.

Oligopoly in practice: For an oligopoly it is typical that the majority of the supply of goods or services is provided by only a small number of firms. These firms then can dictate any movements on the market, i.e. they may set the price and direct the further overall development of the segment. Usually, if one of the firms within the oligopoly raises its prices, the others will not follow suit. Often, oligopolistic markets are protected by secret agreements on prices (so-called cartel-agreements) and their behaviour comes close to monopolistic markets.