The advantages and disadvantages of oligopoly
Oligopoly brings benefits like innovation and product variety, but also risks like high prices and collusion. Whether it helps or harms consumers depends on how firms choose to compete.
Real World
The UK mobile phone market — dominated by EE, Vodafone, O2, and Three — shows both sides: heavy investment in 5G infrastructure (dynamic efficiency advantage) but persistent above-competitive pricing and an Ofcom investigation into potential coordination (consumer harm).
Exam Focus
Structure evaluation as: advantage → counter-argument → overall judgement with a condition (e.g. 'depends on whether firms collude') to reach Level 4 analysis.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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