Definition of oligopoly
: a market situation in which each of a few producers affects but does not control the market
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Recent Examples of oligopoly from the Web
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The fossil fuels that powered the 20th century were produced by oligopolies, fed into centralised networks and sold on the premise of scarcity.
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In public at least, the chief executives of China’s data oligopolies, including Alibaba and Tencent, are evangelists for the project that requires them to sluice gushers of consumer data to state superhubs.
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The 20th century dominance of American car companies, thanks to corporate oligopoly and labor monopoly, started eroding with the Japanese invasion of the 1970s and 1980s.
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As an oligopoly, the three DRAM makers today are keeping production in check — and raking in money.
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Not only does the credit reporting oligopoly depend on the arbitration dodge, so do other industries that require similar customer restrictions, including credit cards, airlines, cell phone providers, pay TV and many more.
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And with the tight oligopoly of three bureaus, there isn’t much advantage in getting reports right or protecting the data used to create them.
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Lax antitrust enforcement has let American firms form oligopolies and pass the gains to shareholders, not consumers.
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This has generally led to oligopolies that enjoy fat profits but do little to lower prices and lift quality for patients.
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.
Origin and Etymology of oligopoly
olig- + -poly (as in monopoly)
Other Economics Terms
Financial Definition of OLIGOPOLY
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.
Source: Investing Answers
Law Dictionary
legal Definition of oligopoly
plural -lies
: a condition in which a few sellers dominate a particular market to the detriment of competition by others
Learn More about oligopoly
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Nglish: Translation of oligopoly for Spanish speakers Britannica.com: Encyclopedia article about oligopoly
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