18.1 What is Oligopoly?
MyEconLab Concept Video
You have lots of choice when you get a smartphone, but much less choice about your wireless plan provider. Four firms share the U.S. market for wireless service, which is an oligopoly. Whether four firms is too few depends on whether they behave like firms in competition or like a monopoly, either of which is possible.
The distinguishing features of oligopoly are that
A small number of firms compete.
Natural or legal barriers prevent the entry of new firms.
Small Number of Firms
In contrast to monopolistic competition and perfect competition, an oligopoly consists of a small number of firms. Each firm has a large share of the market, the firms are interdependent, and they face a temptation ...
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