Complete Oligopoly Market Characteristics With Definitions And Case Examples In Indonesia

YOGYAKARTA – There are many terms in the market world that should be known by entrepreneurs, one of which is oligopoly.

This term refers to a market condition in which the number of traders and buyers is not comparable. However, the meaning is not that simple.

So, what is the meaning and characteristics of an oligopoly market?

According to the Big Indonesian Dictionary (KBBI), oligopoly is a market condition in which only a small number of producers of goods supply goods so that they or one of them can influence the market price; market conditions that are not balanced because it is influenced by a number of buyers.

Meanwhile, in general, an oligopoly market is a condition of unfair/unbalanced/imperfect competition in the market.

This causes unbalanced buying and selling transactions. This unbalanced competitive condition is known as the Oligopoly Market.

Oligopoly Market Characteristics

One of the characteristics of an oligopoly market is that the number of producers or traders of an item is not proportional to the number of buyers or consumers. That is, in simple terms it can be said that an oligopoly market occurs because the market is only controlled by a few producers or traders while the number of buyers is not comparable. In addition, the characteristics of an oligopoly market are as follows.

1. No Single Company

In an oligopoly market, no single firm or producer dominates the market. Instead, there are usually several producers who in practice will influence each other. This condition will make the company very careful in determining prices, stocks, and so on. Manufacturers will usually also be interdependent.

2. Not many companies

Although there is no single firm, trader, or producer in an oligopoly market, the number of producers or traders is also not large. The nominal "many" in this case is relative but can be said to be less than 10.

3. There are many buyers

Besides there are not many producers or sellers, the number of buyers is many and continues to grow. This makes competition among producers even higher.

4. Goods are homogeneous and replace each other

Homogeneous in the same sense. In an oligopoly market, the goods produced are usually the same but can be substituted for each other. For example, in one market there is the same product but each company produces a different style.

5. Prices are not far apart

Because the goods produced are homogeneous, the prices offered to the market are almost the same or usually only a slight difference. This condition causes price competition to attract as many consumers as possible.

6. High Competitiveness

Competitiveness between producers or traders is usually high. Therefore they will issue a variety of clever marketing strategies.

An example of an oligopoly market

The oligopoly market condition does not only occur in foreign markets, even the national market also experiences the same thing.

For example, the world's mobile phone industry is dominated by Apple and Android. Both have the same product, but have different types, styles, products. The two OSes have similar and not so far apart features. In addition, the price offered is also not so far adrift.

Meanwhile, in Indonesia, the market condition occurs in the cigarette industry. In Indonesia, there are many tobacco-based cigarette manufacturers.

Although there are many manufacturers, the only product that is produced is tobacco cigarettes.

Each manufacturer has a different brand, style, taste, and size. While the prices offered are also not far apart so that each producer will compete to carry out clever marketing strategies to attract as many consumers as possible.

That is the definition and characteristics of an oligopoly market. For other interesting information, visit VOI.ID.