Question

Q. Elaborate the three most important characteristics of an oligopoly market. Give three examples of oligopolistic industries in Saudi Arabia.

Answer 1

Oligopoly is defined as a market organisation in which there are a few sellers of the homogeneous or differentiated products.The number of sellers depends on the size of the market.

The three most important characteristic of an Oligopoly market:

1. Homogeneous or Differentiated products:

The output in an oligopolistic market may be either homogeneous or differentiated.

2.Mutual interdependence:

This is the only feature which sets oligopoly apart from other market structures.It means that price and output decisions of one firm affects the similar decisions of the other firms.

3.Indeterminate Demand Curve of an Oligopolist:

An important feature of oligopoly is that the demand curve faced by an oligopolist is indeterminate . A demand curve shows the amount of the product a firm can sell at various prices.An oligopolist cannot ignore the reaction of the rival firms in view of interdependence of the firms in it.Any change in the price by one firm may results in a change in prices by the rival firms .Therefore it is not definite , it is indeterminate.

Examples of Oligopolistic imdustries in Saudi arabia:

* Oil and gas Industries

* Automobile industries

*Electronic and mobile imdustries