Do you know of any industries in which just three or four companies supply most of a specific product?
From the 1950s to the 1980s, three major broadcast television networks dominated the U.S. airwaves.
After a series of mergers between 2005 and 2015, four major airlines controlled much of the U.S. market, as a November 2018 Page One Economics essay described.
Even more recently, shortages and price increases brought attention to the U.S. baby formula market and global insulin market, which also had just a few suppliers.
Those markets could be considered “oligopolies”―markets in which only a few sellers or suppliers dominate.
Suppliers and sellers in an oligopoly can command higher prices than companies in a competitive market, and if one company in an oligopoly stops producing, it has a bigger effect on supply than it would in a competitive market.
Read on for more comparisons of oligopolies to other types of markets and to learn how to tell whether a particular market could be considered an oligopoly.