Define Oligopoly. 

Meaning of Oligopoly. Oligopoly is that form of imperfect competition in which a few big firms produce most of total output of the industry and are mutually dependent for taking decision about price and output. It is a market situation in between that of monopolistic competition and monopoly. Each firm produces a substantial portion of total output and can influence the market price. Entry of a new firm in the industry is quite difficult. There is price rigidity because no firm changes its price for fear of retaliation by other firms. Instead of lowering the price of its product, the firm resorts to selling costs in the form of advertisement to attract customers. Simply put, two important noteworthy features of oligopoly are — a few firms and interdependence of firms. Remember when there are two sellers (firm), it is called a duopoly. The following are the main features of oligopoly.