Which helps enable an oligopoly to form within a market?

Which helps enable an oligopoly to form within a market?

(i) The government restricts market entry.

(ii) Costs of starting a competing business are too high.

(iii) The number of options in the market confuses consumers.

(iv) No competition exists between producers.

Answer: The correct options and i) and ii).

An oligopoly is a kind of market where there are few big firms that control the particular market with a highly developed barrier to other market entrants. It is well understood that barriers to entry are certain rules and regulations introduced by the government that act as barriers to entry for new firms by providing certain monopoly rights and licensing requirements to existing firms. Besides, other factors which include high start-up costs such as equipment, technology, and infrastructure are likely to put young firms in a difficult position to compete efficiently with the oligopolists. Such barriers restrict competition hence ensuring that few firms control large market share hence the formation and sustenance of an oligopolistic nature of the market.