What is the difference between oligopoly and monopoly?

The main difference between oligopoly and monopoly is that a monopoly occurs when a single firm produces goods with no similar or close market substitutes, while an oligopoly occurs when several larger firms produce similar goods with minor differences.

In both cases, oligopoly and monopoly are economic market conditions. Monopoly simply refers to the dominance of a single seller in the market, while oligopoly is a market condition where multiple manufacturers compete in the market.

Key areas covered

1. What is oligopoly - definition, characteristics 2. What is monopoly - definition, characteristics 3. Similarities between oligopoly and monopoly - association sketch 4. Difference between oligopoly and monopoly - comparison of the main differences

key terms

Oligopoly, monopoly, market structure Difference Between Oligopoly and Monopoly - Comparison Summary

What is oligopoly

Oligopoly is a market condition where a small number of sellers coexist in the market. An oligopoly market is relatively consumer-friendly. This is mainly done through competition among sellers. This competition also results in moderate prices and multiple choices for consumers . In short, within an oligopolistic market, a sale or production decision by one manufacturer or seller directly and largely affects the operation and performance of the other manufacturer or seller.

Oligopoly vs. Monopoly

Furthermore, there is no particular source of power in an oligopolistic market. The oligopolistic market exists entirely because of the cooperative nature of other sellers. In short, oligopolistic markets therefore maintain fair prices for consumers, largely due to the prevailing competitiveness.

What is Monopoly?

The main characteristic of a monopolistic market is that it is mainly controlled by a single seller. This seller has the power to influence market decisions and prices. In a monopoly market, consumers usually have limited choice and have to choose what is on offer. In simpler terms, the monopoly has all the power while the consumer lacks the power to make decisions.

Compare oligopoly and monopoly

A monopoly market derives its power mainly from three sources: legal, economic and conscious. A monopoly seller will use his position to his advantage. He will chase away the competitors by lowering the prices to such an extent that it is impossible for the fellow sellers to survive in the market. In addition, there are general economic conditions such as a large capital requirement for startup companies and. legal barriers such as intellectual property rights become beneficial to the monopoly authorities in order to maintain their power.

In addition, a monopoly market can often charge high prices. With no other competitor to challenge them, monopoly sellers would use their supremacy to maximize their profits.

Similarities Between Oligopoly and Monopoly

  1. Both oligopoly and monopoly are economic market conditions.
  2. In addition, these terms include producers, goods, the market and consumers.
  3. The barriers to entry are very high in both oligopolistic and monopoly markets

Difference Between Oligopoly and Monopoly


Oligopoly is an economic market condition in which multiple sellers compete with each other to sell a product with slight differences within the same market. On the other hand, monopoly is an economic market condition in which a single seller or a limited number of large companies dominate the market.


In addition, competition between sellers in an oligopolistic market leads to moderate and fair prices. On the contrary, higher prices are charged within a monopoly market, mainly because of the lack of competition there.


Within an oligopoly, a small number of companies compete with one another on the basis of product prices, customer service, product differentiation, etc. In a monopoly, a single company controls a large market share because it allows prices to be fixed and the highest profit to be made.


In short, the main difference between oligopoly and monopoly is that in an oligopolistic market there are multiple sellers competing to sell relatively similar products with minor differences, while in a monopolistic market there is a dominant seller who handles market prices in such a way that the Profit flow is aimed only at his company. Hence, unlike an oligopolistic market, we cannot see much competition within a monopoly market.


1. “ Monopoly Markets - Overview, Characteristics, and Regulation .” Corporate Finance Institute, February 3, 2021. 2. Hayes, Adam. “ What are current examples of oligopolies? ”Investopedia, July 24, 2021.

Image courtesy:

1. “ Market structures ” By RHECON3430 - Own work (CC BY-SA 4.0) via Commons Wikimedia2. " Market Economy " (CC BY-SA 3.0) By Nick Youngson via Blue Diamond Gallery

About the author: Anuradha

Anuradha holds a BA in English, French and Translation Studies. She is currently studying English literature in a second language context in the master’s course. Her areas of interest include arts and literature, language and education, nature and animals, cultures and civilizations, food and fashion.