Using examples, explain what an oligopoly is.

An oligopoly is a market structure in which a small number of firms dominate the industry. These firms have significant market power and can influence prices and output levels.

For example, the airline industry is an oligopoly, with a few major carriers such as American Airlines, Delta, and United Airlines controlling the majority of the market. These airlines have the ability to set prices and determine the number of flights, which can impact the entire industry.

Another example of an oligopoly is the smartphone industry, with Apple and Samsung being the dominant players. These companies have a significant influence on the market and can dictate the direction of technological advancements and pricing strategies.

In an oligopoly, firms often engage in strategic behavior, such as price collusion or non-price competition, to maintain their market power and competitive advantage. This can lead to higher prices for consumers and limited choices in the market.