Why might only a few firms dominate an oligopolistic industry?
A)A natural or legal barrier to entry exists.
B)Perfectly elastic demand makes small-scale operation economically inefficient.
C)Decreasing returns to scale may make small-scale firms more advantageous.
D)Inelastic market demand leads to the domination of the industry by a few firms.
E)It is due to the outcome of the prisoners' dilemma.

Question

Quizplus · Accepted Answer

In an oligopolistic industry, a few firms dominate because there are significant barriers to entry, such as high startup costs or legal restrictions, which prevent new competitors from entering the market easily.

Why Might Only a Few Firms Dominate an Oligopolistic Industry