Contrary to popular belief, not all markets are similar. They are as different as they come since some possess characteristics that set them apart from the rest. As a result, such differentiation factors have resulted in markets such as competitive, monopoly, and oligopoly situation. In this paper, the focus will be on highlighting the attributes that define the oligopoly market situation and how it forms with time.
As indicated by Investopedia (n.d.), an oligopoly constitutes a market with more than two operators. However, the number is fewer than that of the competitive market. The overriding factor in an oligopoly is that the operators possess unique attributes that set them apart from the rest. In short, they tend to embrace differentiation such that no operator is similar to any other. Each presents unique product offerings to the market and possesses the competitive advantage that sets them apart from the rest. As a result, it is not easy to lock out the rest by maximizing their differentiation aspects (Bloch & Bhattacharya, 2014). The operators have to be creative enough to devise ways to extinguish the competitive advantage by their main rivals.
In an oligopoly, firms are easily affected by the actions of competitors than in other markets. Mainly, such moves tend to have far-reaching consequences on their activities. As mentioned, oligopoly markets have few operators. Therefore, actions by competitors will have direct impacts on the operations of all the active members in this market. Each operator will try as much as possible to counter the new development with the appropriate responsive strategies and tactics. From this brief analysis, an oligopoly seems to be one market system where the operators are always moving back and forth in efforts to outdo their rivals.
In most cases, oligopolies result from mainly two scenarios. The first is when operators op...
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