Characteristics of Oligopoly:

The following are the main features of oligopoly:

(a) Interdependence: There is mutual interdependence among the firms. That is, the market share of one firm is significantly affected by the actions of one or more of its rival firms, and this is recognized by each firm in the industry.

(b) Barrier to entry: There are substantial barriers to entry into the oligopolistic industry. Such barriers include exclusive patents, control over essential inputs, economies of scale, high capital requirements, plant cost, etc.

(c) Advertisement: As in monopolistic competition, oligopolistic firms also strive to achieve product differentiation and higher proportion of the market share through intensive advertisement.

(d) Identical or differentiated products: The firms in the oligopolistic industry may produce either identical or differentiated products.Firms in the steel and banking industries produce virtually identical products, whereas firms in the automobile industry are characterized by differentiated products.

(e) Lack of uniformity:  The firms in the industry differ considerably in size. The industry is highly concentrated as a result of several kinds of barriers preventing new firms from entering. Note that, a concentrated industry is an industry that has a large percentage of its output produced by a few firms.

(f) Absence of unique pattern of pricing behaviour: The rivalry arising from interdependence among the oligopolistic firms lead to two conflicting motives. Each firm wants to remain independent as well as achieve maximum possible profit.