Setting the Price - Oligopoly

In an oligopoly there are a number of powerful businesses so care needs to be taken when it comes to pricing policies. A 'price war' can follow as a result and this can be extremely dangerous for businesses.

As a result, businesses with oligopolistic market structures keep a close eye on the prices of their competitors. They tend to follow a competition-based pricing policy and push the sale of goods in other ways such as promoting the brand and advertising regularly.

Companies colluding with each other is possible in an oligopoly but collusion is anti-competitive and illegal in the United Kingdom.