Oligopolistic Competition

Oligopolistic competition occurs when a market is dominated by a small number of large firms, each holding significant market power. These companies are aware of each other's actions and often react strategically, influencing prices, product offerings, and marketing. Because their decisions impact one another, they tend to avoid aggressive price wars but may instead compete through innovation, branding, or quality. This creates a market environment where competition exists, but the dominance of a few players shapes the overall pricing and product landscape, often leading to higher prices or less variety than in more competitive markets.