<p>Oligopoly is best understood as occuring when firms behave strategically: when firms decide how much to produce, under oligopoly they will take into account the optimal responses of other firms.</p>

<p>If you have a long tail of small firms, beyond a certain size these firms won't have much influence at all on prices and will act as 'price-takers'. </p>

<p>So either the firms are large enough to have an impact - in which case everyone is an oligopolist, or they are small enough not to matter much - in which case the market is still oligopolistic because only the larger firms matter. Note competition authorities regularly block mergers in markets with 2-3 large firms and a bunch of very small ones: E.g. the European Commission's DG Comp has just blocked Siemens/Alstom given the large market shares of these firms, despite the fact that they face competition from a few smaller suppliers.</p>

<p>Only if all firms were small / had to act as price takers would you have something (that might approximate) perfect competition</p>

CC BY-SA 4.0
2019-02-23T00:27:13.980Z
2019-02-23T00:27:13.980Z
leafnoise
<p>If the industry is dominated by a few major large retailers like Walmart and target with thousands of many other small supermarkets around the country, what is the market structure of the industry? is it a perfect competition or an oligopoly? </p>

CC BY-SA 4.0
2019-02-22T17:32:40.347Z
See [Herfindahl-Hirschman Index](https://www.investopedia.com/terms/h/hhi.asp)
Herr K.
CC BY-SA 4.0
2019-02-22T18:50:45.220Z
It may also be a monopsony, but there are usually few indices available to measure this type of market power.
Bertrand
<markets><oligopoly>
Supermarkets industry market structure
lookbehind
# Supermarkets industry market structure

(Asked by: username_0 on 2019-02-22)

If the industry is dominated by a few major large retailers like Walmart and target with thousands of many other small supermarkets around the country, what is the market structure of the industry? is it a perfect competition or an oligopoly?

**Tags:** markets, oligopoly
> **Comments:**
> **username_1**: See [Herfindahl-Hirschman Index](https://www.investopedia.com/terms/h/hhi.asp)  
> **username_2**: It may also be a monopsony, but there are usually few indices available to measure this type of market power.  

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## 1 answers

### Answer by username_3 on 2019-02-23. Score: 0 | Accepted answer

Oligopoly is best understood as occuring when firms behave strategically: when firms decide how much to produce, under oligopoly they will take into account the optimal responses of other firms.

If you have a long tail of small firms, beyond a certain size these firms won't have much influence at all on prices and will act as 'price-takers'.

So either the firms are large enough to have an impact - in which case everyone is an oligopolist, or they are small enough not to matter much - in which case the market is still oligopolistic because only the larger firms matter. Note competition authorities regularly block mergers in markets with 2-3 large firms and a bunch of very small ones: E.g. the European Commission's DG Comp has just blocked Siemens/Alstom given the large market shares of these firms, despite the fact that they face competition from a few smaller suppliers.

Only if all firms were small / had to act as price takers would you have something (that might approximate) perfect competition


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