oligopoly
ol-ih-GOP-uh-lee
/ˌɒlɪˈɡɒpəli/
A state of limited competition in which a market is shared and dominated by a small number of large sellers.
Firms in an oligopoly are highly interdependent; one firm's price change usually forces competitors to react.
The story behind the word. Constructed in 16th-century scholarly Latin from Greek 'oligos' (few) and 'polein' (to sell), designed as a direct counter-concept to Aristotle's 'monopoly'. It described markets where a tiny group of merchants controlled trade without any single one enjoying total control.
Word relationships
- cartel: An oligopoly is an industry structure with few firms; a cartel is an explicit, often illegal arrangement between those firms.
- perfect competition: A market with vast numbers of small firms where none can individually influence market prices.
Commonly confused with
- monopoly: Monopoly features exactly one seller; oligopoly features a small handful of dominant sellers.
Word family
- oligopolist (noun): A firm or owner belonging to an oligopoly.
- oligopolistic (adjective): Relating to or characterized by an oligopoly.
Collocations
- tight oligopoly
- oligopoly power
- duopoly
- interdependent oligopoly
Example sentences
- "The commercial airline industry functions as an oligopoly dominated by three or four major international carriers." Industry structure discussion
- "High barriers to entry often protect an oligopoly from external disruption." Economic policy writing
Memory hook
OLIGO sounds like 'few legs' on an octopus—a few big players reaching out to grab the market. Oligo = few, Poly = sellers.
When not to use
Do not use if there is only one sole firm selling (monopoly) or if hundreds of small sellers compete equally.
Fun facts
- The wireless telecommunications sector in most major nations is a classic oligopoly, typically shared by only 3 or 4 giant telecom operators.
Explore more words
interdependent, interdependence, strategic, collusion, equilibrium, interconnectedness
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