Balbharati solutions for Economics HSC 12th Standard Maharashtra State Board
Chapter 5. Forms of Market
Q.5. Answer the following:
1. Explain the features of Oligopoly.
Meaning:
The term oligopoly is derived from the Greek words ‘Oligo’ which means few and ‘poly’ which means sellers. It is that market where there are a few firms (sellers) in the market producing either a homogeneous product or a differentiated product. For example, mobile service providers, cement companies, etc.
Features of oligopoly:
Few firms or sellers: Under an oligopoly market, there are few firms or sellers. These few firms dominate the market and enjoy considerable control over the price of a product.
Interdependence: The seller has to be cautious with respect to any action taken by the competing firms. Since there are few sellers in the market, if any firm makes a change in the price, all other firms in the industry also try to follow the same to remain in the competition.
Advertising: Advertising is a powerful instrument in the hands of oligopolists. A firm under oligopoly can start an aggressive and attractive advertising campaign with the intention of capturing a large part of the market.
Entry barriers:
The firm can easily exit from the industry whenever it wants. But has to face certain entry barriers such as Government license, patents etc.
Lack of uniformity: here is a lack of uniformity among the firms in terms of their size. Some firms may be small while others may be of a bigger size.
Uncertainty: There is a considerable element of uncertainty in this type of market due to different behavior patterns. Rivals may join hands and co-operate or may try to fight each other
