Characteristics

• What are the characteristics of oligopolies?


  • High barriers to entry and exit
  • High concentration ratio
  • Interdependence of firms
  • Product differentiation
• How are high barriers to entry and exit a characteristic of oligopolies?


  Oligopolistic markets often have significant barriers that prevent new firms from entering the industry or exiting firms from easily exiting. These barriers can include high capital requirements, economies of scale, patents, and government regulations.
• How is a high concent ration ratio a characteristic of oligopolies?


  Oligopolies are characterised by a small number of large firms dominating the market. The concentration ratio measures the market share held by the largest firms in the industry, and in oligopolistic markets, this ratio is typically high.
• How is interdependence of firms a characteristic of oligopolies?


  Oligopolistic firms are highly aware of the actions and decisions of their competitors. They must consider how their own choices, such as pricing and marketing strategies, will affect the behaviour and reaction of rival firms.
• How is product differentiation a characteristic of oligopolies?


  Oligopolistic firms engage in product differentiation to distinguish their offerings form competitors. This can include branding, quality variations, and advertising to create brand loyalty.