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OLIGOPOLI
Up to now, we have covered two extreme types of markets. We covered perfect
competition with the highest degree of competition, then we covered monopoly with the
lowest degree of competition. Now, we will cover oligopoly and monopolistic
competition. These two market types are in between two extremes: they show some
features of competition and some features of monopoly.
Oligopoly Definition: Oligopoly is a market structure in which there are a few sellers
and they sell almost identical products. There are barriers to entry in oligopoly. Oligopoly
is characterized by the tension between cooperation and self- interest among these sellers.
For example, if the oligopolist firms can cooperate, they can charge a high price and
share profits. But if they cannot cooperate and instead they compete because of following
their own self-interest, then price goes down and profits decline. We will give examples
of this later.
Oligopoly Examples: crude oil (Kuwait, Iraq, Saudi Arabia, Venezuela, Kazakhstan,
Azerbeijan) , coke (Coca Cola, Pepsi, Cola Turka), GSM providers (Turkcell, Vodafone,
Avea), inter-city bus transportation (between Istanbul & Denizli: Varan, Ulusoy,
Pamukkale, Kseolu), airline travel (between Istanbul and Frankfurt: Turkish Airlines,
Pegasus, ) etc.
Monopolistic Competition Definition: Many firms sell products that are similar but not
identical. There is free entry and exit like perfect competition. But at the same time, there
is product differentiation. Product differentiation allows firms to charge a high price and
collect some profits.

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Monopolistic Competition Examples: music CDs (every artist has a different CD),
movies (every film is different), computer games, restaurants, athletic apparel (adidas,
nike, umbro, Turkish brands), etc.
Two dimensions:

1-Number of firms

2-Product differentiation

Perfect Competition: Many

No

Monopoly:

One

No

Oligopoly:

A few

No

Monopolistic Comp.: Many

Yes