Oligopoly

An oligopoly is a market dominated by a small number of firms whose decisions significantly affect one another and the market.

Game theory: The mathematical study of strategic interactions among decision-makers. It models how each firm's best move depends on expected rival responses.
Market structure: The organization of a market, including the number of firms, product differences, and barriers to entry. Oligopoly is one form of market structure, alongside monopoly and competition.
Perfect competition: A market model with many firms selling identical products and no individual seller controlling price. It contrasts oligopoly's small number of strategically interdependent firms with price-taking sellers.
Price leadership: A pricing practice in which one firm sets a price that rivals then follow. It is a visible way oligopolists may coordinate behavior without an explicit agreement.
Nash equilibrium: A strategy profile in which no participant can improve its outcome by changing strategy alone. Oligopoly outcomes often settle where no firm benefits from changing its choice unilaterally.
Market concentration: The degree to which a market's sales or output are held by a small number of firms. Concentration indicates how strongly a few firms may influence market outcomes.
Monopoly: A market structure in which a single seller supplies a product with no close substitute. It marks the opposite extreme from oligopoly in the number of dominant firms.
Tacit collusion: Coordination among firms through mutual expectations rather than an explicit agreement. Repeated interaction can sustain oligopoly prices without direct communication.
Cournot competition: A model in which firms choose quantities simultaneously, taking rivals' quantities as given. It captures output decisions when firms anticipate one another but cannot coordinate.
Concentration ratio: A measure of the combined market share held by a specified number of leading firms. It provides a simple way to quantify the dominance of leading oligopolists.

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