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OLIGOPOLY:
Oligopoly is present when a handful of competitors dominate the market for a
good or service and each firm makes pricing and marketing decisions in light
of the expected response by rivals.
Oligopoly describes markets that can be characterized as follows:
1. Few sellers. A handful of firms produces the bulk of industry output.
2. Homogeneous or unique product. Oligopoly output can be
homogeneous (e.g., aluminum) or distinctive (e.g., ready-to-eat cereal).
3. Blockaded entry and exit. Firms are heavily restricted from entering
or leaving the industry.
4. Imperfect dissemination of information. Cost, price, and product
quality information is withheld from uninformed buyers.