Experts pls give me the meaning of oligopoly' its types and features.
Types under the basis : perfect oligopoly' non - cullosive or non- cooperative oligopoly , cullosive or cooperative oligopoly and duopoly.
Featuers under the basis : few firms , firms are independent in taking price and output decisions , barriers to the entry of firms and non- price competituion
Features of Oligopoly
1. Few Large Firms- There exists few but large and dominating firms. These firms account for majority of market supply, thereby control the market price and quantity of the output.
2. Mutual Dependence- There exists a very high degree of mutual interdependence between the firms in an oligopoly market. The price and the quality decisions of a particular firm are dependent on the price and the quality decisions of the rival (other) firms. Hence, a firm must take into consideration the probable rival reactions, while formulating its own price and output decisions.
3. Restricted Entry- As there exists a cut-throat competition among the firms, so it is very difficult for any new firm to enter into the industry. Moreover, as the existing firms are the only giants in the market, so it narrows the scope for a new entrant to enter the industry due to high cost associated with the entry.
4. Selling Costs- An oligopolistic firm incurs heavy selling costs such as, advertisement expenditures to convince and attract the consumers to buy the products. This is due to existence of cut-throat competitions in an oligopolistic market.
Types of Oligopoly
1. Collusive Oligopoly- The firms might decide to collude together and not to compete with each other. Thus, in such a case the firms would behave as a single monopoly and aim at maximising their collective profits rather than their individual profits. Such a move is known as collusive oligopoly.
2. Non-collusive Oligopoly- The second case is where each firm aims at maximising its own profits and decides how much quantity to produce assuming that the other firms would not change their quantity supplied. Such a move is known as non-collusive oligopoly.