What is an Oligopoly?

An oligopoly is an economic structure in which a very small number of firms dominate an industry, such as an internet or power provider. These firms have significant market power. They have complete control over prices and output levels without concern for competition.

From a practical standpoint, it makes little sense to run redundant power lines, for instance, only so there can be competition. However, this leaves the consumer with very little choice or negotiating power over pricing or customer care.

In such industries, it is very difficult for new firms to enter due to high startup costs, economies of scale, and legal restrictions.

I live in Michigan and my power provider is Detroit Edison. If they tell me the price of electricity has changed, what am I as the consumer to do if there is no competition to turn to if I am unhappy with this situation?

I am not concerned with the cost of energy at the moment, however, these business structures pose risks to the consumer if not managed with competency and empathy.

-Zac