What is the difference between monopoly and oligopoly?
Understand the Problem
The question is asking about the differences between two market structures: monopoly and oligopoly. The user is seeking to understand how these two economic terms are distinct from each other, likely focusing on aspects such as the number of firms in the market, pricing power, and competition levels.
Answer
A monopoly has one seller, whereas an oligopoly has a few large sellers.
The final answer is: A monopoly occurs when a single company controls the market with no close substitute, whereas in an oligopoly, a few companies dominate the market, with each holding significant influence but unable to completely dictate market conditions.
Answer for screen readers
The final answer is: A monopoly occurs when a single company controls the market with no close substitute, whereas in an oligopoly, a few companies dominate the market, with each holding significant influence but unable to completely dictate market conditions.
More Information
Monopolies often result in higher prices and less innovation due to lack of competition. Oligopolies, while more competitive, can still lead to collusion where companies conspire to set prices, limiting competition.
Tips
Common mistakes include assuming oligopolies have no competition or that monopolies always result in worst-case scenarios for consumers.
