Why is competition limited in an oligopoly?

A. High entry costs prevent new producers from entering the market.

B. Producers completely refuse to engage in price wars.

C. No major distinctions exist between producers.

D. Producers actively segment the market to avoid competition.

A. High entry costs prevent new producers from entering the market.

Explanation:

Oligopoly is the opposite of monopoly (only one company that offers a service or is the supply). An oligopoly has few companies offering one service or product which can control the supply and market price of it, such as automotive sector or airline. One of the things that limited competition in an oligopoly is the costs of entry, to set up the manufacturer, to make research and marketing and be able to compete with these companies the entry cost is high.