Define an Oligopoly market and list its characteristics.

Oligopoly is a market structure in which few rival firms dominate the entire industry. For example, Airline industry in North America is an oligopoly as there are few major North American domestic airline firms like American Airlines, Inc. (AAL), Delta Air Lines, Inc. (DAL) Southwest and United Airlines and a subsidiary of United Continental Holdings, Inc. (UAL) dominates the entire airline industry. Firms under oligopoly enjoy partial control over price through brand loyalty which is achieved through heavy expenditure on the advertisement. Full control over price is not possible as there are very few big competitors in the market.

Oligopoly is a market structure with the following major characteristics:

(1) The market is dominated by the presence of a few firms which are large in size and able to influence the market. There are many buyers in the market.

(2) Firms compete with one another either for market share (quantity) or for price. Their demand curve is indeterminate.

(3) Firms' decisions are interdependent. Each firm's price (or output) decision is dependent on decisions taken by the other firms.

(4) Barriers to entry exist in the market like a monopoly. With a view to avoiding competition, oligopoly firms often form cartels.

(5) Under oligopoly. firms tend to avoid price competition. Instead, they focus on non-price competition.