The basic idea of oligopoly is that it is a market structure in which there are only a very few large firms that are participating in the market. The main characteristics of this market structure are:
- A small number of sellers, enough that any one of them can influence the overall market.
- Homogeneous or differentiated product.
- Difficult to enter the market. This means that new competitors cannot easily enter to compete with the firms already in the market.
Firms in this market structure must pay a good deal of attention to one another as the actions of each firm can have a major impact on competitors. This is the market structure of big businesses such as auto makers.