Features of Oligopoly Market

i) Few Sellers

Under the Oligopoly market, the sellers are few, and the customers are many. Few firms dominating the market enjoy a considerable control over the price of the product.

ii) Interdependence

It is one of the most important features of an Oligopoly market, wherein, the seller has to be cautious with respect to any action taken by the competing firms. Since there are few sellers in the market, if any firm makes a change in the price or promotional scheme, all other firms in the industry have to comply with it to remain in the competition. Thus, every firm remains alert to the actions of others and plan their counterattack beforehand to escape the turmoil. Hence, there is a complete interdependence among the sellers with respect to their price-output policies.

iii) Advertising

Under Oligopoly market, every firm advertises their products on a frequent basis with the intention to reach more and more customers and increase their customer base. This advertising makes the competition intense. If any firm does a lot of advertisement while the other remained silent, then you will observe that his customers are going to the firm which is continuously promoting its product. Thus, in order to be in the race, each firm spends lots of money on advertisement activities.

iv) Competition

It is genuine that with a few players in the market, there will be an intense competition among the sellers. Any move by one firm will have a considerable impact on its rivals. Thus, every seller keeps an eye over its rivals and be ready with the counterattack.

v) Entry and Exit Barriers

The firms can easily exit the industry whenever they want, but has to face certain barriers to enter into it. These barriers could be Government license, Patent, large firm’s economies of scale, high capital requirement, complex technology, etc. Also, sometimes the government regulations favour the existing large firms, thereby acting as a barrier for the new entrants.

vi) Lack of Uniformity

There is a lack of uniformity among the firms in terms of their size, some are big, and some are small. Since there are less number of firms, any action taken by one firm has a considerable effect on the other. Thus, every firm must keep a close eye on its counterpart and plan the promotional activities accordingly.