An Oligoploy Is a Few Large Sellers Who Dominate an Industry. a Few Examples of This Would

An oligoploy is a few large sellers who dominate an industry. A few examples of this would be the auto industry, soft drink companies, fast food resturants, airlines, and oil companies. Though there are a few firms in an oligopoly, the exact number is less important than the ability of any single firm to cause a change in ouput, sales, and prices.
Ologopolists are so large, that whenever an individual firm acts the others follow. This pattern is defined as interdependent behavior. An example of this would be pricing. If McDonalds and Wendy’s are each selling hamburgers and one would have a price increase, it would be the tendancy for the other to follow suit.
Product differntiation is when there are real or imagined differences between competing products in the same industry. In an oligopoly, this is an important concept. Since there are so few firms, each of their products are the same such as airlines. In reality, there would be no difference between riding on American Airlines or Southwest Airlines but because of consumer tastes and name recognition, people will choose one over the other.
This is why advertising to oligopolists. Since every firm has essentially the same product they are trying to sell, they must make their name well known to the public. By producing flasy comercials, billboards, catchy slogans, and having famous people affiliated with their brand, it draws more people into their company rather than their compition’s.
To enter into an oligoply is a diffucult process. Since there are only a few large, well established companies that controll the market, it is near impossible for a new compotition to enter. Not many people would recognize their name, and it would be difficult to draw customers away from big name corporations that make millions a year. Say for instance a new soft drink brand entered the market. They would be competing against names such as Coke and Pepsi which are well known around the world, and it would be hard to establish themselves as a good alternative for these brands.
Some specific areas of an oligopoly are collusions, price-fixing, and cartels. A collusion is a formal agreement to set prices or the otherwise behave in a cooperative manner. This would be like AT&T and Comcast colaberate in such a way that through their partnership each company would make a large profit. In this way price – fixing also takes place. This is when firms agree to charge the same or similar prices for a product. Finally, a cartel is a group of firms that gets together to make output and price decisions. An example of this is the Organization of Petroleum Exporting Countries (OPEC), a large group of countries made up of Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, Venezuela, and Ecuador . The organization has been setting oil prices since 1965, hosting regular meetings between the oil ministers of its member states.