Recent Examples of oligopoly from the Web
But the market could go from cut-throat competition to oligopoly to state control with extraordinary speed.
But now, according to Georgette Boele, diamond industry analyst at ABN AMRO, the market is an oligopoly, with three mining giants dominating smaller players.
In effect, four of the eight largest companies in the world control an online-advertising oligopoly and are denying competitors access to these services.
An exploitation some online oligopolies expose music authors to by using legal loopholes and operating a parasitic value creation model.
The real evidence is that America’s Big Three car markers became less competitive as an oligopoly, and foreign imports forced them to shape up and make better cars.
In the second Gilded Age, consolidation has led toward oligopoly.
But Silicon Valley increasingly looks like an oligopoly.
The excess profits of the health-care firms are equivalent to $200 per American per year, compared with $69 for the telecoms and cable TV industry and $25 captured by the airline oligopoly.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'oligopoly.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
Financial Definition of OLIGOPOLY
What It Is
An oligopoly is an economic market whereby a small number of companies or countries generate and control the entire supply of a good or service.
How It Works
Let's assume that Company XYZ, Company ABC, and Company 123 produce 95% of the country's carrots. If Company XYZ raises the price of its carrots, consumers may choose to buy from Company ABC and Company 123 instead. But if Company ABC and Company 123 decide to follow Company XYZ's lead and raise their prices, the three companies can essentially control the entire carrot market through their power to set prices.
In a truly competitive market, the three companies would not have this luxury--they would probably have to either lower their prices or differentiate their products to stay in business. Companies in an oligopoly are keenly interested in what the other members of the oligopoly will do next. The goal of a company involved in an oligopoly is to increase profits by attempting to monopolize the market by finding and maintaining competitive advantages.
Economies of scale often lead to oligopoly-like conditions because they discourage new competitors from entering a market. Consider how capital intensive it is to enter the airline business or the soda business (industries are commonly thought of as oligopolies). And because there is so little of the market available to competitors, new entrants to an oligopoly rarely succeed.
Why It Matters
Although uncommon, oligopolies can quickly turn into cartels, which are groups of companies that agree to influence prices by controlling the production and sale of a good or service (one of the world's most well-known cartels is the Organization of Petroleum Exporting Countries--OPEC). The companies essentially collude to control supply and prices. This is why prices in oligopolistic industries are usually higher than markets that allow greater competition.
Oligopolies and cartels are hard to maintain in the long term. Federal antitrust laws, most notably the Sherman Act, make cartels and collusive activity illegal in the United States. Also, disagreements within cartels regarding output may cause a break up of the group. In addition, consumers often become sensitive to the increased prices.
legal Definition of oligopoly
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