Oligopoly is market structure dominated by small number of larger firms, which are highly dependent on each other. Oligopolies may be identified using concentration ratios, which measure the proportion of total market share controlled by a given number of firms. When there is a high concentration ratio in an industry, economists tend to identify the industry as an oligopoly. Firm in an oligopoly market are highly dependent on each other. They have to see how their decision will affect other firm for example if Toyota starts to give free early checkups for their cars then demand for Toyota will raise at same time demand for Suzuki and Honda will fall. Not only the demand but also the market share will also fall. Another main advantage of oligopolist is the exploitation of economies of scale which is low average cost. There is high barrier to entry in this market for example cost barrier/infrastructure etc. oligopolies may adopt a highly competitive strategy, in which they can go
Conventional business methord: A young entrepreneur Jeff Bezos back in 1995 started Amazon. He funded it from his parent’s pocket started as an online bookstore, which was operated from his garage. He created a website by the name of amazon.com. It wasn’t even a bookstore but was a book broker. However, he couldn’t make money out of it for the next five years. He felt that his customer base is very limited in number hence he should explore new markets. Improvisations through technology: In 2005 amazon launched amazon prime; a video streaming service this helped amazon expand its consumer base and started bringing in substantial profits for the company. Today amazon prime is the second largest paid membership program in the world after Netflix with over a 100 million subscribers. After witnessing the smartphone boom, Amazon was quick to react and it launched its first consumer product: Kin