Is Wal-Mart in an oligopoly or is it a monopoly?

Expert Answers
thetall eNotes educator| Certified Educator

Wal-Mart does not qualify to be referred to as a monopoly because it is not the only giant retail chain in the market. Monopolies exist within markets as sole suppliers of products and services. The entities do not encounter competition, which puts them firmly in control of the market.

Wal-Mart is an oligopoly because it exists in an oligopoly market structure. An oligopoly market structure is characterized by the existence of few suppliers in the market. Wal-Mart, in this case, coexists with Costco and Target within the same market structure. However, it is important to note that Wal-Mart has the greatest share of the market. Apart from existing in a market with few suppliers, oligopolies have the ability to stifle new competition through adverse business tactics such as price-cutting and collusion between the giant entities.

Smaller retailers have been driven out of markets by the entry of Wal-Mart in their locality. The retailers are forced to shut down in fear of price wars and sheer influence that a company such as Wal-Mart can exert on a market.

pohnpei397 eNotes educator| Certified Educator

Of these choices, it is more correct to say that Wal-Mart is in an oligopoly.  

The clearest reason to say this has to do with the definition of a monopoly.  In a monopoly, there is only one seller for an entire market.  This is not true of Wal-Mart's market.  Wal-Mart must compete with other similar stores such as K-Mart and Target and ShopKo.  It must also compete with other stores that carry particular items that Wal-Mart carries.  For example, Wal-Mart must compete with stores like Best Buy and Staples in selling electronics.  It must compete with internet retailers like Amazon in a number of areas.  Because there is so much competition, Wal-Mart cannot be considered a monopoly.