The various models of oligopoly explain observed behavior in different industries, but none is satisfactory as a general theory of oligopoly because two to ten companies can compete on pricing, quantity, technological advancements, marketing, and reputation
What is General Theory of Oligopoly ?
An oligopoly refers to a market structure with few enterprises and high entry barriers. Oligopoly = A market structure with few firms and high entry barriers. Firms frequently compete fiercely, as each makes decisions on prices, volumes, and advertising in order to maximize profits.
Oligopolies may pursue a highly competitive approach, in which case they can reap benefits comparable to more competitive market structures, such as cheaper pricing. Even though there are only a few enterprises, the market may be very competitive due to their behavior.
As a result, oligopolies display the same inefficiencies as monopolies. Oligopolies never reach an efficient scale of production efficiency because the marginal cost curve contacts the marginal revenue curve before it hits the average total cost curve, and so never run at their least average total cost.
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