The principal features of oligopoly are as under: 

(1) Small Number of Big Firms: Oligopoly market is the one in which a small number of big firms dominate the market for a product. Market dominance is retained through intense advertising. Advertising generates brand loyalty. Established brand loyalty enables the producer to exercise partial control over price. It makes demand for the product as relatively less elastic. Accordingly, firms are able to generate extranormal profits.

(2) Difficult to Trace Firm’s Demand Curve: It is not possible to determine firm’s demand curve under oligopoly. This is because of high degree of interdependence among the competing firms. Thus, when a firm lowers its price, demand for its product may not increase, because the rival firms may lower the price more, because of which the buyers shift to the rival firms. Implying that there is no specific response of quantity demand to change in price. This makes it impossible to draw any specific demand curve for a firm under oligopoly.

(3) Entry Barriers: There are barriers to the entry of new firms. These are created largely through patent rights. Because of these barriers, the existing firms are not much worried about the entry of new firms in the market. They continue to earn extra-normal profits even in the long run.

(4) Non-price Competition: Under oligopoly, firms tend to avoid price competition. Instead, they focus on non-price competition. 

Example: In India, both Coke and Pepsi sell their product at the same price. But, in order to increase its share of the market, each firm takes to the aggressive non-price competition. Coke and Pepsi sponsor different games and sports; they also offer lucrative schemes (like of maintenance of school garden) if their product is patronised.