What are the important characteristics of an oligopoly market? Explain with the help of an example.

An oligopoly market is a type of market structure where a few large firms dominate the industry. Here are some of the important characteristics of an oligopoly market:

1. Few Dominant Firms: In an oligopoly, there are a few large firms that control most of the market share. These firms are mutually interdependent, meaning the actions of one firm will directly affect the others.

2. High Barriers to Entry: Oligopolies have high barriers to entry, such as high startup costs or proprietary technology, which prevent new competitors from easily entering the market.

3. Non-Price Competition: Firms in an oligopoly often compete on factors other than price, such as advertising and product differentiation.

4. Price Rigidity: Prices in an oligopoly tend to be sticky because firms are aware that their actions can provoke reactions from their competitors. If one firm lowers its price, others are likely to follow, leading to a price war.

5. Mutual Interdependence: The firms in an oligopoly are mutually interdependent. Any change in price, product, etc. by a firm will have a direct effect on the fortune of its rivals.

An example of an oligopoly market is the smartphone industry. A few large firms like Apple, Samsung, and Huawei dominate the market. These companies have high barriers to entry, such as proprietary technology and high research and development costs, which prevent new competitors from entering the market. They also compete on factors other than price, such as product features and brand reputation.