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An oligopoly is a market arrangement in economics where a few big companies control the market. A market that has an oligopoly is one that is dominated by a small number of powerful companies, frequently as a result of entry barriers that make it difficult for new competitors to enter the market.
The interconnectedness of the market's businesses is what distinguishes an oligopoly. As there are so few huge companies, each one's decisions greatly affect the market as a whole. For instance, if one company cuts its rates, the other businesses in the market might be compelled to do the same to stay competitive. Similarly to this, if one business ramps up its promotion or launches a
Oligopolies can develop for a number of reasons, such as economies of scale, network effects, governmental regulation, and entrance obstacles. Oligopolies can occasionally result in competitive behavior that benefits consumers, such as price wars and innovation. Yet, in other circumstances, oligopolies can result in anti-competitive activity, such as collusion, price fixing, and market sharing, which can hurt consumers and limit competition.
Telecommunications, finance, aviation, and pharmaceuticals are a few examples of sectors that are frequently referred to as oligopolies. In certain sectors, a small number of powerful major companies hold a disproportionate amount of market power, which frequently leads to high pricing and few options for consumers.
