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In economics, an oligopoly is a market type in which a few (more than one, usually less than five) firms compete.

Expanded Definition

Think airlines.

In this type of market, there are high barriers to entry, such as cost (airplanes are expensive!). This type of market also tends to be inefficient in that it does not allocate resources in the most efficient manner possible. Prices and profits tend to be higher while quantity supplied tends to be lower than perfect competition and the law of supply and demand would place these. There is also the possibility of collusion between the firms to set the prices.

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