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Simple English definitions for legal terms
oligopoly
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A quick definition of oligopoly:
OLIGOPOLY: When a few big companies control a market, they can charge high prices and produce less, similar to a monopoly. This is called an oligopoly. It's like playing a game of poker with multiple players, where they can work together to make more money instead of competing against each other.
A more thorough explanation:
An oligopoly is a market structure where a few large companies dominate the market, leading to high prices and low output, similar to a monopoly. Unlike a monopoly, there are multiple companies in an oligopoly, but they work together to control the market. This can make it difficult for new companies to enter the market and compete.
For example, the airline industry is an oligopoly. A few large airlines, such as Delta, United, and American, dominate the market and control prices. They work together to limit the number of flights and seats available, which keeps prices high. This makes it difficult for smaller airlines to enter the market and compete.
Another example is the soft drink industry. Coca-Cola and PepsiCo are the two largest companies in the industry and control a significant portion of the market. They work together to set prices and limit competition from smaller companies.
These examples illustrate how an oligopoly can lead to high prices and limited competition, which can be harmful to consumers. It is important for governments to regulate these markets to ensure fair competition and protect consumers.