Difference Between Oligopoly vs Monopoly
In a market, one can find various forms of imperfect market competition for several services and products. Oligopoly vs Monopoly are 2 of them, wherein monopoly can be a view for those products and services which will not have any kind of competition, while on the flip side oligopoly can be observed for the products and services with stiffer competition.
Monopoly: Services offered for Transport, Water, Electricity, and so on are practical examples of the monopoly. A monopoly is a type of market condition wherein the only single seller is selling an entire product, which is 3.
Oligopoly: Industries like an automobile, cold drink, telecommunication, etc. can be some of the kinds of industries where an Oligopoly type of competition can be found out. Oligopoly is a kind of market competition, whereby there are a lessor few numbers of sellers or vendors in the marketplace who are selling differential or nearly differential products. In an oligopoly, as stated there are only a few firms or sellers who are operating in the marketplace and so, the sellers or the firms are influenced by the activities of other firms or the sellers
Head To Head Comparison Between Oligopoly vs Monopoly (Infographics)
Below is the top 9 difference between Oligopoly vs Monopoly:
Key Differences Between Oligopoly vs Monopoly
Both Oligopoly vs Monopoly are popular choices in the market; let us discuss some of the major differences :
- The major difference between Monopoly vs Oligopoly market is Monopoly will refer to a kind of market that has one seller who is dominating the entire market and on the other side, the economic structure wherein there are a handful or few of firms or sellers in the marketplace who are selling similar or same kind of products and who are competing among themselves is an Oligopoly.
- In a monopoly, there is only a single player in the whole marketplace, but in an oligopoly, again the range of players will be from two to ten, in the marketplace.
- In a monopoly kind of competition, the seller will dominate the entire market by selling a unique or say specialty product for which there will be no substitute is available. On the contrary, in an oligopoly, the service offered, or the product sold by the firm are either the same or different that have closed or nearby substitutes.
- The reasons for restriction on the barriers to the entry in the monopoly market can be economic, legal, or institutional but the major reason for the barrier to the entry in oligopoly kind of competition is economies of scale
- In a monopoly the price discrimination does exist, different customers or consumers must pay a different price for the same or similar kind of product. In contrast to the oligopoly, the price will remain fixed for a longer period.
- In an oligopoly, the firms or the sellers set their product price based on the price of the similar or the same product which is offered by the rival firm or the seller in the marketplace, which is just flip side in the case of monopoly type of competition, as there are no rivals.
Oligopoly vs Monopoly Comparison Table
Below is the 9 topmost comparison between Oligopoly vs Monopoly
|Basis of Comparison||Oligopoly||Monopoly|
|Basic Definition||An oligopoly is a kind of marketplace that has small or few numbers of relatively large sellers or firms that will produce almost the same and slightly different products. In this kind of market as well there will be significant barriers to entry for other firms or enterprises.||A monopoly is a marketplace that contains one firm that will produce goods which has no close substitute, and further with significant barriers to entry of other sellers or the firms|
|Number of firms||The count could go from 2 to 10 firms.||There is only a single firm.|
|Competition||There is little competition here between the firms.||There is no competition|
|Product type||There is no such fixed bound of a product but depending upon the number there could be no differentiation to substantial differentiation as well.||A monopoly sells a unique and extremely different product|
|Price determination||Competition or the firm’s direction decides the price of the product.||Consumers’ demand will determine the price of the product.|
|Entry barriers||Comparatively less than Monopoly but an entry barrier does exist.||The entry barrier is relatively very high here.|
|Product Pricing||Unlike Monopoly, prices are here fairly charged.||Consumers are charged a very high price.|
|Pricing controls||Where the Marginal revenue will equal Marginal cost would be optimal pricing for Oligopoly.||Monopoly has its sole control over the pricing of the product.|
|Competition type||Oligopoly firms may collide with each other rather than compete with one another.||As mentioned there is no competition hence no chance of collusion|
Well after reading the above statements one may think that a monopoly kind of competition will never fail but that’s not the case. Take an example of XYZ firm which is trying to sell a product which is very unique in its form but the same product is disliked by the consumers or the customers where it’s trying to sell them and yes that is the scenario where this XYZ firm which is appearing to be dominating but in the end, it will fail miserably and will make losses. So, it’s not always that monopoly competition is successful and does make a profit always.
On the flip side, Oligopoly can collide and become one firm in the industry and remove the price wars and charge their consumers or the customers that they want to. In an oligopoly kind of competition, collusion is one of the most typical infractions to lead to the proceedings that are anti-trust.
E.g. In the year 2012, the Department of Justice in the US sued 6 major book publishers for fixing the price of electronic books.
This has been a guide to the top difference between Oligopoly vs Monopoly. Here we also discuss the Oligopoly vs Monopoly key differences with infographics, and comparison table. You may also have a look at the following articles to learn more.