What Are Examples of Oligopolies?

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An oligopoly is a market in which a few large firms supply most of the output and each one has to account for how the others will react. Common examples in the United States are domestic airlines, wireless carriers, film studios, recorded music, mass media, smartphone and computer operating systems, and automobile manufacturing. Globally, the oil market shaped by OPEC and large commercial aircraft (Boeing and Airbus) are classic cases. Historically, steel, railroads, tires, grocery chains and pharmaceuticals have also been described as oligopolistic. What these markets share is a small number of dominant sellers, high barriers to entry, and prices that respond to what rivals do.

What Makes a Market an Oligopoly

The defining feature is interdependence, not a specific number of firms. There is no fixed upper limit. A market qualifies when the firms are few enough that each one’s actions significantly affect the rest. A duopoly, with two firms, is the smallest oligopoly. A monopoly sits beyond it, with a single firm holding concentrated market power.

Because no single firm can push the others out, the group as a whole holds market power that none of its members holds alone. This creates a choice every oligopolist faces: compete hard on price, or avoid price wars by moving in step with rivals. When firms take the second path, the market can behave somewhat like a single company. They may offer similar contract terms, keep prices in the same range, or compete on branding and features rather than price.

That coordination can take two forms:

• Explicit collusion: firms agree on prices, output or territories. In the U.S. this is price-fixing or market division and is illegal under antitrust law. Where it is organized openly, as among member governments, it is called a cartel.
• Tacit coordination: no agreement exists, but each firm knows that a price cut will be matched and a price rise may be followed, so prices settle at a level that suits the group. Game theory, including the prisoner’s dilemma and Nash equilibrium, is the standard tool economists use to model this kind of strategic behavior.

Many oligopolies arise without deliberate coordination at all. Industry consolidation through mergers and acquisitions, or government policy that limits the number of operators, can leave only a few firms standing. The limited number of competitors is enough to create the structure. Oligopoly is a topic in microeconomics, the study of individual markets and firms, alongside perfect competition, monopolistic competition and monopoly.

How Economists Spot an Oligopoly

The most common measure is the concentration ratio, which adds up the market shares of the largest firms. A four-firm concentration ratio (CR4) sums the shares of the top four. A high CR4 suggests a few firms control the market.

A second measure, the Herfindahl-Hirschman Index (HHI), is used by U.S. antitrust agencies when reviewing mergers. It squares each firm’s market share (in percentage points) and adds the results, so larger firms weigh more heavily.

Hypothetical example. Suppose a market has four firms with shares of 30%, 25%, 20% and 15%, and the remaining 10% is split among many small firms too small to matter for the calculation.

• CR4 = 30 + 25 + 20 + 15 = 90%
• HHI (top four only) = 30² + 25² + 20² + 15² = 900 + 625 + 400 + 225 = 2,150

Now compare a second market where the top four each hold 22.5%. The CR4 is still 90%, but the HHI falls to 4 × 506.25 = 2,025. The two measures agree that both markets are concentrated, but the HHI registers that the first market has a clearer leader. Neither number proves firms are coordinating. Concentration shows the structure, and behavior has to be observed separately: whether rivals follow each other’s price changes, whether entry has stalled, and whether market shares stay stable over long periods.

Market definition also changes the answer. A firm can dominate a narrow market (one airport, one region, one product type) while holding a small share of a broad one. That is why the same company can look oligopolistic in one analysis and competitive in another.

Real-World Examples of Oligopolies

Airlines

The U.S. domestic airline market is the standard textbook case. Four carriers, American, Delta, Southwest and United, have together flown roughly two-thirds of domestic passengers in recent counts, and the next largest carrier, Alaska Airlines, has held a share in the single digits. Decades of mergers reduced the number of major carriers to this group.

Airlines show how interdependence works in practice. When one carrier cuts fares on a route, the others typically match. But the few firms on that route face limited alternatives from outside: for long trips or overseas travel, most travelers cannot easily switch to a car or train. Demand for air travel on those routes is relatively inelastic, so even after rivals match each other, fares can remain higher than they would be with many sellers.

Wireless and telecom carriers

Telecommunications began as a monopoly. The original AT&T (the Bell System) controlled most U.S. telephone service until an antitrust case led to its breakup in 1984 into regional operating companies known as the “Baby Bells.” Over the following decades, consolidation rebuilt a concentrated market. Verizon traces its roots to Bell Atlantic, one of the Baby Bells, and today’s AT&T grew from SBC, another Baby Bell, which acquired its former parent. Together with T-Mobile, these three carriers dominate U.S. mobile service. The capital needed to build national networks and acquire wireless spectrum makes new entry difficult.

Mass media and streaming

Ownership of U.S. television, cable and news outlets is concentrated in a small group of conglomerates, including Comcast, Disney and Charter Communications. Streaming services such as Netflix and Amazon initially entered as disruptors. Over time they became part of the group of large players rather than opening the market to many smaller competitors. Subscription video is often described as its own oligopoly, since a few platforms hold most subscribers and smaller services struggle to fund content at the same scale.

Film studios

Is the entertainment industry an oligopoly? Hollywood has long been one. The North American film industry is dominated by the “big five” studios: Disney, Paramount, Sony, Universal and Warner Bros. As of 2025, they held a combined market share of over 70%. Independent producers and local theaters exist, but the major studios set industry standards for everything from talent pay to distribution terms.

Ownership overlaps strengthen the structure. Many well-known production companies are subsidiaries of larger groups. Pixar, for example, is owned by Disney.

Recorded music

The music business is concentrated among three major labels: Universal Music Group, Sony and Warner. Two of these are tied to companies that also own major film studios, so the same corporate families reach across several entertainment markets.

Big Tech

Operating systems give a clear tech example. Smartphones run almost entirely on Apple’s iOS or Google’s Android, and desktop and laptop computers are dominated by Microsoft Windows and Apple’s macOS. Each of these is effectively a duopoly. More broadly, a small group of companies (Google, Meta, Microsoft and Amazon) dominates large parts of the internet economy, from search and advertising to cloud computing.

The line between oligopoly and monopoly matters here. In August 2024, a federal judge ruled that Google, owned by Alphabet, had illegally maintained a monopoly in online search. The ruling did not itself set remedies, but it showed that within a broad “Big Tech” oligopoly, an individual market can still be judged a monopoly.

Automobiles

Car manufacturing is a capital-intensive oligopoly. Leading manufacturers in the U.S. market include Ford, General Motors, Stellantis (formed by the merger of Fiat Chrysler Automobiles and France’s PSA Group) and Tesla. Worldwide, only a few more groups operate at major scale: Toyota, Hyundai Motor Group, Honda, Volkswagen Group and the Renault-Nissan-Mitsubishi alliance.

Prices in the auto market cluster by segment rather than by brand. Budget cars from different makers sit in similar price ranges, and so do luxury models. The price of a car reflects its trim and model class more than which company built it.

Links between nominally independent firms can reduce competition further. Subaru is an independent automaker, but it co-develops models with Toyota, including the BRZ and the Solterra, which is built in a Toyota plant, and Toyota owns a stake in Subaru Corporation.

Global Oligopolies

Some oligopolies are international rather than national.

• Oil: The Organization of the Petroleum Exporting Countries (OPEC), founded in 1960, is the best-known cartel. Member governments coordinate production targets to influence world oil prices. Because its members are sovereign states, U.S. antitrust law does not stop the coordination the way it would for private companies. Oil and gas more broadly has long been cited as an oligopolistic industry.
• Commercial aircraft: Large passenger jets are built mainly by Boeing and Airbus, a global duopoly. Development costs, certification requirements and decades of accumulated engineering keep new entrants out.
• Smartphone operating systems and automaking: Both are global markets with the same few leaders described above.
• Pharmaceuticals and steel: Both have been cited historically as oligopolistic, with patents protecting drugmakers and enormous plant costs protecting steel producers.

A firm’s position can also differ by country. A carrier, retailer or bank that is one of three national players at home may be a small competitor abroad, so whether an industry counts as an oligopoly depends on which country’s market is being measured.

Why These Industries Become Oligopolies

The common thread is a high barrier to entry. Typical barriers include:

• Capital requirements: Aircraft fleets, wireless networks, car factories and refineries cost far more than most new firms can raise.
• Economies of scale: Large firms spread fixed costs over more units, so a small entrant starts at a cost disadvantage.
• Regulation and licensing: Spectrum licenses, airport slots, safety certification and drug approval limit how many firms can operate.
• Intellectual property: Patents and trademarks protect incumbents’ products and brands.
• Mergers and acquisitions: Consolidation has been a major source of concentration. Since the 1980s, it has become more common for U.S. industries to be dominated by two or three firms as major players merged.
• Network effects: Operating systems and online platforms become more valuable as more people use them, which favors whichever firms are already large.

Some oligopolies are tolerated or supported by government because policymakers view a few large operators as easier to regulate or better able to fund infrastructure.

What Oligopolies Mean for Prices and Consumers

With fewer competitors, firms have more room to set prices above what a perfectly competitive market would produce. Customers who need the product often must buy from one of the few firms, so firms can hold prices up, restrict supply, or offer weaker service and similar contract terms without losing many customers.

There are limits. Because rivals still exist, a firm that raises prices too far risks losing share to the others, so consumer harm is generally smaller than under a monopoly. Large firms can also fund research, networks and product development that smaller firms could not.

For investors, oligopolistic industries have practical uses. Because a few firms face the same demand and cost conditions, their stocks often trade as a group, which some traders use to set up pairs trades: going long one company and short a close rival to bet on relative performance rather than the sector’s direction. Concentrated industries also show up heavily in broad benchmarks such as the S&P 500, where a few large firms in sectors like technology carry large index weights.

Exceptions: When a Big Company Does Not Make an Oligopoly

A large market share is not enough by itself. Several cases change the answer.

Coca-Cola, Netflix and Nike. Each holds a large share of its market, but the test is whether one firm’s actions significantly change what rivals do. If a Coca-Cola price increase led other soft drink makers to raise prices in response, that would point to an oligopolistic role in soft drinks. Without that interdependence, a strong brand is simply a strong brand.

Monopolistic competition. Many consumer markets with famous brands, such as clothing, restaurants and many packaged foods, have many sellers offering differentiated products. Each firm has some pricing power from its brand, but entry is relatively easy and no small group controls the market. These markets are classified as monopolistic competition, not oligopoly. Soft drinks sit near the boundary: a few companies own most major brands, yet many smaller beverage makers sell competing products.

Monopoly within an oligopoly. As the Google search ruling shows, a company can belong to an oligopolistic group of tech firms while being found to hold a monopoly in one specific market.

Local versus national markets. A national industry with many firms can still be an oligopoly locally. A single airport dominated by one or two airlines, or a town with only two grocery chains, can show oligopoly behavior even when the national market looks competitive.

Legal limits. Being an oligopoly is not illegal in the U.S. Firms can operate freely as long as they do not violate antitrust laws, which prohibit:

• Unreasonable restraints of trade
• Plainly harmful conduct such as price-fixing, dividing markets and bid-rigging
• Mergers and acquisitions that substantially lessen competition

Tacit coordination, where firms simply follow each other’s prices without agreeing to do so, is generally outside these prohibitions. Explicit agreements are not.

FAQs

The Bottom Line

Consumers, investors and anyone weighing competition in a market can use oligopoly analysis to read how a few dominant firms set prices. Concentration measures such as CR4 and HHI reveal structure, but rivals' behavior shows whether coordination exists. Oligopolies are legal in the U.S., and prices usually stay above competitive levels while remaining checked by rivalry, so outcomes fall between perfect competition and monopoly.