Oligopoly

A market structure dominated by a small number of large firms whose strategic decisions are interdependent—each firm must consider rivals' likely responses when making pricing, investment, or marketing decisions. Unlike monopoly (one firm) or perfect competition (many firms), oligopoly strategy is inherently game-theoretic. Airlines, telecom, auto manufacturing, and big tech are all oligopolies. The key dynamic: firms can either compete aggressively (price wars that destroy everyone's margins) or tacitly coordinate (maintaining prices that benefit all incumbents at consumers' expense).

When to use it

When operating in any market with 2-6 dominant players; when considering pricing changes that rivals will see and respond to; when evaluating whether to compete or differentiate; when assessing industry profitability dynamics and why margins stabilize or collapse.

How it can help

If you're in an oligopoly (most mature industries), your strategy must account for competitive response. Price cuts that make sense in isolation can trigger price wars that destroy industry profitability. Product innovations get copied quickly. The strategic options are: compete on non-price dimensions (differentiation), signal cooperation (price leadership), or disrupt the oligopoly structure entirely. Understanding which game you're playing determines which moves make sense.