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1. What is the central characteristic of oligopoly?

1. What is the central characteristic of oligopoly?

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The central characteristic of an oligopoly is the presence of a small number of interdependent firms.The key characteristic of an oligopolistic market is interdependence.There are a small number of firms and each firms decision is interdependent on that of the other firms.If a firm offers price cut, the other firms will follow that but if a firm goes for a price hike that will not be followed by the other firms.As a result, the demand curve for an oligopoly market structure is kinked.Oligopoly market structures have a high concentration of market power and more likely to form cartels.

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