Connection lost
Server error
If the law is on your side, pound the law. If the facts are on your side, pound the facts. If neither the law nor the facts are on your side, pound the table.
✨ Enjoy an ad-free experience with LSD+
Legal Definitions - oligopoly
Definition of oligopoly
An oligopoly describes a market structure where a small number of large companies control the majority of the market share for a particular product or service. Because there are so few dominant players, these companies often have significant influence over pricing and production levels. This limited competition can lead to higher prices for consumers and less choice, similar to what might be seen in a monopoly, but with multiple powerful entities rather than just one.
- Example 1: Mobile Phone Service Providers
In many countries, the market for mobile phone services (cellular calls, text, and data) is largely dominated by three or four major network operators. These companies own most of the infrastructure and serve the vast majority of customers.
This illustrates an oligopoly because these few large providers control the market. They often offer similar pricing plans and service packages, and it can be very challenging for new companies to enter and compete effectively due to the massive investment required in infrastructure. As a result, consumers may find limited variation in pricing or service innovation across providers, and prices tend to remain relatively stable and often higher than they might be in a more fragmented, competitive market.
- Example 2: Commercial Aircraft Manufacturing
The global market for large commercial passenger aircraft is primarily controlled by just two major manufacturers. These two companies design, produce, and sell nearly all the airplanes used by airlines worldwide.
This situation is a clear example of an oligopoly. Airlines seeking to purchase new jets have very few options, giving these two manufacturers substantial power in negotiating prices, delivery schedules, and customization options. The limited competition means that the cost of aircraft, and consequently, the potential cost of air travel, can be significantly influenced by these two dominant players, with little pressure from smaller competitors to drive prices down or accelerate innovation.
Simple Definition
An oligopoly describes a market where a few large sellers control or dominate the industry. This limited competition often results in higher prices and lower output for consumers, mirroring conditions found in a monopoly.