An oligopoly is a form of a market where a specific industry is under the control by a small number of powerful sellers known as oligopolists. The dominance of the market by a few key players creates a lack of competition in the market which results in an increased cost of the goods and services being offered by that particular industry (Federal Trade Commission).

Due to the lack of key players; the competition brings a certain level of transparency at the seller level where all retailers are aware of what the other is doing. This market is knit closely together that even the smallest of decisions by any one of the firm in it is influenced by other forms, and has the ability to impact other firms in a huge way. Having few players in the market might make it easy for a company to keep track of its competition, but it also has a downside.

Though there are only a few sources affecting the company, the amount of power they can exert onto the other companies is extremely large. Hence the level of strategic planning undertaken by oligopolists needs to consider and take into account the expected responses any of their market participants might generate as a result of their actions.

Strategy implementation is an extremely important task for interdependent industries and involves decision like whether they are going to be market leaders, whether they want to implement a new strategy before everybody else or wait and see how a particular decision for a rival pans out before implementing it. In industries where there is a lot of competition, the first mover and second mover advantage differs from an oligopoly set up. It can be quite often case that there are only two players in the industry so the level of competition might be not be cut throat but companies have to decide what market position will be more beneficial to their ultimate goal (Economics Online).

Though the major description of oligopoly is that the market is dominated by only a few players, however, there is a possibility that there might be a few small players involved along with the few major players in the market (Economics Online).

Oligolpoly has to offer several advantages along with disadvantages. Talking about its downside, it is not the ideal market from for consumers. It reduces the number of options available to them not to mention the fact that these form of highly concentrated market with the extremely reduced level of competition results in overall high priced products whose output is not very large. Also, it becomes easy for the major players to raise the barriers of entry in an effort to deliberately stop other players from entering the market.

It is said that oligopoly is potentially dangerous to the overall economic well-being. Furthermore, firms operating in oligopolies do not pay much attention to consumer needs, since consumers do not have a lot of options available to them; oligopolies have no fear of losing their customers and are often inefficient (Economics Online).

Despite all these disadvantages, oligopoly has certain benefits to offer as well. For oligopolies that adopt extremely competitive strategies, they become quite similar to the regular market structure where there is high level of competition which produces benefits like low and competing prices. The overall market might not be uncompetitive but the behavior of the firms within the market doesn’t have to be. Another attribute of oligopolies is that they are innovative and often come up with new products and keep improvising their business processes which eventually is to the benefits of the consumer (Economics Online).