Prerequisites of Oligopoly

An oligopoly - a market dominated by a few sellers - is often able to maintain market power through increasing returns to scale.

Oligopolies can form when product differentiation causes decreased competition within an industry.

One important source of oligopoly power are barriers to entry: obstacles that make it difficult to enter a given market.

Price leadership is a form of tacit collusion that oligopolies may use to achieve a monopoly-like market outcome.