Oligopoly An oligopoly describes a market situation in which there are limited or few sellers. Each seller knows that the other seller or sellers will react to its changes in prices and also quantities. This can cause a type of chain reaction in a mar

An Oligopoly market exists in which a small number of firms dominate the supply to an entire market. Each firm producers a very similar product. In Australia the oligopoly is the major market form. It is because Australia is so small market located far from overseas markets and this thus requires producers to be larger, so they are more competitive. There are hundreds of examples of oligopolistic industries, e.g. cars (Holden), breakfast cereals (Kellogs)

This market form does not only depend on the larger producers, but the recognition of their interdependence, the action of one producer will affect the actions of others and each oligopoly firm watches their rivals closely. Oligopolies compete fiercely for market shar...