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The word OLIGOPOLY is derived from the Greek word oligos which means few.

Wikipedia defines Oligopolistic Market as a market characterized by a small numb er of producers who often act together to control the supply of a particular goo d and its market price. It is dominated by a few large suppliers who are interdependent on each other, b efore making any pricing and investment decisions. It is also explained as a mar ket condition in which sellers are so few that an action of any one of them will materially affect price and have a measurable impact on competitors; in other w ords; since there are few participants in this type of market, each Oligopolist is aware of the actions of the other. OPEC is an example of Oligopoly since few countries control the production of oi l, the steel and the automobile industry in United States of America is another example. The Key characteristics of an Oligopolistic Market are as follows: It is a market dominated by a small number of participants who are able to c ollectively exert control over supply and market prices. Few firms sell branded products which are close substitutes of each other. Entry barriers for the other firms are high; the barriers can be due to pate nts, copyrights, government rules / regulations or ownership of scare resources. Firms are interdependent for decision making. Products can be homogenous (standardized) or heterogeneous (differentiated). The sellers are the price makers and not price takers, since the few sellers mutually dominate the pricing decisions. The sellers can achieve supernormal profits in the long run. The sellers can achieve economies of scale; since for the large producers as the level of production rises, the cost per unit of products decreases; thus en suring higher profits. There is high degree of market concentration, since the four-firm concentrat ion ratio is often used, where the market shares of four largest firms are measu red (as a percentage) since they form the major portion of the market share. An Oligopolist faces a downward sloping demand curve; however; the price elastic ity depends on the rivals reaction to change its price, investment and output. The firm uses Game Theory, in this method the firms takes into account the decis ions/strategies of the competitors before deciding their strategies. The differe nt forms of Oligopoly are: 1. Duopoly: - A Duopoly, is a simple form of Oligopoly in which only two firms d ominate a market. e.g.:- Pepsi and Coke, Cadbury and Schweppes. 2. Oligopsony: - In Oligopsony, there are few buyers and large number of sellers . The other characteristics are same as Oligopoly. 3. Bilateral Oligopoly: - A market with a few sellers (oligopoly) and a few buye rs (Oligopsony) is referred as Bilateral Oligopoly.

4. Cartel: - When there is a formal agreement among the Oligopolist for a collus ion (to increase prices and restrict production in the same way as a monopoly) w ith an objective to reduce risk and foster joint profit it is termed as Cartel.