Oligopoly Facts
What is an oligopoly?
A market with a small number of dominant firms
What is a market structure?
How an industry is organized and how firms compete
Name one oligopoly industry in Jamaica
Telecommunications / banking / petroleum
Is entry into an oligopoly easy or difficult?
Difficult
Who sets prices in an oligopoly?
No single firm; often a dominant firm (price leader)
How many firms dominate an oligopoly?
A few firms (usually 2–5)
Name one factor that influences market structure.
Number of firms / product differentiation / barriers to entry / price control
Name one telecommunications company in Jamaica
Digicel or Flow
What are barriers to entry?
Obstacles that make it hard for new firms to enter
What is price leadership?
When one firm sets the price and others follow
What does interdependence mean in an oligopoly?
Firms depend on and react to each other’s decisions
What does product differentiation mean?
Whether products are identical or different
Name one bank in Jamaica
NCB / Scotiabank / JMMB
State one barrier to entry
High startup costs / brand loyalty / legal restrictions / technology
What happens if one firm lowers its price?
Other firms will likely match it
What advantage do firms gain from economies of scale?
They can produce efficiently at lower cost
What does price control refer to?
The ability of firms to influence or set prices
Name one petroleum company in Jamaica
Rubis or TotalEnergies
What type of costs make entry difficult in oligopolies?
High startup costs
What is the kinked demand curve?
A model showing firms avoid changing prices due to competitor reactions
Why do oligopolies often have less competition?
Because only a few firms dominate the market
List two factors that influence market structure
Any two: number of firms, product differentiation, barriers, price control
Why are these industries oligopolies?
Because a few firms dominate and entry is difficult
Is exit from an oligopoly easy or costly?
Costly
Why are prices “sticky” in an oligopoly?
Firms are reluctant to change prices because of competitors’ reactions