Pub. date: 2008 | Online Pub. Date: May 28, 2008 | DOI: 10.4135/9781412963930 | Print ISBN: 9781412941655 | Online ISBN: 9781412963930 | Publisher:SAGE Publications, Inc.About this encyclopedia
The term oligopoly designates a market form in which a few sellers dominate the market sector. This creates disequilibrium in the market, affecting both its efficiency and the entire society. In an ideal free-market economy, firms operate in perfect competition, producing each product at the lowest possible cost and selling it at the lowest possible price. In an oligopoly, however, many parameters that characterize perfect competition are unfulfilled: products and services are less differentiated, buyers and/or sellers lack information about prices and traded goods, entry barriers exist for new sellers, and individual buyers and sellers lack independence. Product differentiation is the process of distinguishing a product In ...