Eon Inc., Electravia Inc., and FC Inc., the three largest firms in the consumer electronics industry, hold close to 85 percent of the industry's market share. These companies mainly compete against each other by providing unique features in their products rather than pricing them low. These firms are interdependent, and each firm must consider the strategic actions of its competitors. Which of the following industry competitive structures does this scenario best illustrate?
A) monopolistic competition
B) oligopoly
C) monopoly
D) perfect competition

Question

Quizplus · Accepted Answer

This scenario best illustrates an oligopoly. The term oligopoly comes from the Greeks and means "few sellers." An oligopolistic industry is consolidated with few (large) firms, differentiated products, high barriers to entry, and some degree of pricing power. A key feature of an oligopoly is that the competing firms are interdependent. With only a few competitors in the mix, the actions of one firm influence the behaviors of the others.

Eon Inc, Electravia Inc