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Unit 13: Oligopoly
Ashwani Panesar, Lovely Professional University

Unit 13: Oligopoly Notes

CONTENTS

Objectives
Introduction
13.1 Features of Oligopoly
13.2 Types of Oligopoly
13.2.1 Cournot Model (Duopoly)

13.2.2 Other Duopoly Models
13.2.3 Collusive Oligopoly Models
13.3 Kinked Demand Curve Models
13.3.1 Sweezy’s Model of Kinked Demand Curve

13.3.2 Hall and Hitch Version of Kinked Demand Curve
13.4 Market Structure and Barriers to Entry
13.5 Summary
13.6 Keywords
13.7 Self Assessment

13.8 Review Questions
13.9 Further Readings

Objectives

After studying this unit, you will be able to:

State the features of oligopoly
Discuss various types of oligopoly
Explain the kinked demand curve
Identify the barriers to entry in market

Introduction

Oligopoly is a situation in which only a few firms (sellers) are competing in the market for a
particular commodity. On reading this unit you will see that the structure of oligopoly is
different from that of the three market structures we have discussed till now. The distinguishing
characteristics of oligopoly are such that neither the theory of monopolistic competition nor the
theory of monopoly can explain the behaviour of an oligopolistic fi rm. But speaking generally,
you will find that an oligopoly is much like a monopoly, in which only one company exerts

control over most of a market. In an oligopoly, there are at least two firms controlling the market.
The retail gas market is a good example of an oligopoly because a small number of fi rms control
a large majority of the market.

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