What is oligopoly?

An oligopoly is a type of market structure. A good example to think about would be the supermarket industry, where we can see our main suppliers of this industry are the likes of Tesco, Asda, Aldi etc. In an oligopoly there are only a few dominant suppliers in the market who hold the majority of the market share. This means there are high barriers to entry. We can also say that firms are interdependent when it comes to setting prices. For example if we use supermarkets again we can tell that they compete on prices due to the availability of substitutes from other supermarkets so all firms must be wary of each others actions.