If there are a small number of firms in an industry:

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When there are a small number of firms in an industry, they may be able to collude and increase prices above the market price level due to their market power. This is known as oligopoly pricing. However, this is not always the case and it depends on the specific market conditions and the behavior of the firms. Price competition may also occur if the firms do not collude, but it may be less intense than in a more competitive industry with numerous firms. Firms may also choose to exit the industry rather than compete each other out of business. While new firms may enter the industry, it is not necessarily guaranteed that numerous firms will result.

If There Are a Small Number of Firms in an Industry