Discuss the role of government in regulating oligopoly.

Oligopoly is a market structure in which a very few large
firms control the great majority of the market.  This market structure is one in which
collusion can easily occur between the firms that are big players in the market. 
Government regulation is useful to the extent that it prevents collusion from
occurring.

For example, the airline industry, especially in
past decades, was an oligopoly.  The government believed that it was important to
regulate that market so as to prevent the airlines from colluding to keep prices high. 
Government must ensure that competition will happen even in an oligopoly.  Of course,
the government must take care so as not to overregulate.  In the case of the airline
industry, the government seems to have made this mistake because deregulation of the
industry actually led to more competition and lower
prices.

In short, then, governments should ensure that
oligopolies remain competitive, but should not engage in excessive regulation that ends
up stifling competition.