Oligopoly describes a particular market structure in which there are only a few suppliers. For classification as an oligopoly, one measure used by market regulators is to calculate the combined market share of the top four players in a particular market. If the figure is between 60% and 80%, it is classified as a loose oligopoly. These oligopolists will have some market power, as they will be the biggest players and may be able to set the market price, or be ‘price makers’. If the combined market share of the top four players is more than 80%, this is classified as a tight oligopoly, and there may be strong barriers to entry that prevent competitors from entering the market. Banking, petrol retailing and car manufacturing are all examples of oligopoly, and present problems for individual buyers as there is an imbalance of power and competitive processes may not be effective in securing value for money. See also Market Concentration, Market Failure and Market Structure.

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Discover the world’s largest Glossary of Procurement terms

With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.