The word is derived from the Greek and describes a situation where there are only a few sellers of a commodity or service on a given market, eg. in the European Union the production of detergent is almost entirely divided between Unilever and Procter & Gamble. Rivalry on the market usually results in lower profits than could be achieved through firms cooperating with one another. Such cooperation to limit competition is known as collusion. A more formal type of collusion would be a price fixing ring, known as a cartel - an illegal arrangement in most countries.
The main theories are:
- Stackelberg's duopoly
- Cournot's duopoly
- Sweezy's oligopoly
- Betrand's olipogoly
- Contestable markets by Baumol
Other market forms