situation in which a few companies share control of the market for selling a
good or service. Therefore, they are jointly able to exert a good deal of
influence over consumer prices. Firms in an oligopoly situation have a great
deal of interdependence, because if one firm changes its prices or competitive
structure, it affects all members in the industry. The airline and tobacco
industries are examples of oligopolies.
A market in which a limited number of sellers follow the lead of a single major firm. For example, the domestic automobile market was long characterized as an oligopoly, with American Motors, Chrysler, and Ford following the pricing lead of industry giant General Motors. Compare monopoly, oligopsony.
An industry that is
dominated by a small number of companies that manufacture substantially
identical products. The American automobile industry and the tobacco industry
are two examples. An oligopoly is far less competitive than one with many
manufacturers, but slightly more competitive than a monopoly.