A comparison between these two market structures is bound to be illuminating.

• One or Few: The primary difference between oligopoly and monopoly is that monopoly contains a single seller, whereas oligopoly has two or more sellers. Such a difference might seem to provide a clear separation. But not necessarily.


• Substitutes: In some cases, the difference between oligopoly and monopoly is blurred by the closeness of substitutes. A monopoly produces a good with NO close substitutes. An oligopoly firms produces a good with a small number of relatively close substitutes.
  
  However, the oligopoly-monopoly difference is blurred if an oligopoly firm pursues product differentiation to such an extent that it creates a product with no close substitutes. As such, the oligopoly moves closer to monopoly. For example, Microsoft was once one of several oligopoly software companies. However, continued modification and enhancements of its software increasingly reduced the degree of substitutability with other software, moving it closer to monopoly status.
  
  Alternatively, changes in the goods produced by other firms can make the good produced by a monopoly good more of a substitute. As such, the monopoly firm becomes more of an oligopoly. For example, AT&T once held a nationwide monopoly on telephone services. Technological advances, such as cellular telephones, allowed other firms to offer increasingly close substitutes, moving AT&T to oligopoly status.


• Cooperation: The dividing line is also blurred between oligopoly and monopoly due to cooperation and collusion. The small number of large firms in oligopoly creates an opportunity and an incentive to cooperate rather than compete. Doing so can effectively transform an oligopoly industry into a monopoly. The industry might contain more than one firm, but those firms act as one.