Question

How is an oligopoly different than a monopoly? Which is better. Explain why.

Answer 1

Oligopoly has few firms where monopoly has a single firm dominating /serving the entire market. A monopoly face no competition while firms in oligopoly have to use strategic planning to outsmart the rivals. Monopoly charges a price that is higher than oligopoly perhaps because it has a greater market power. Monopoly barely advertise or spend on advertising while oligopolies spend millions on making advertisements and selling their products. No variety is offered by a monopolist while oligopoly competes with price, quantity and quality

Oligopoly is better because

• Price competition does not allow prices to be too high
• Quality of products are under check
• Smaller relative deadweight loss
• Greater variety of goods.