What is a key characteristic of oligopoly market structure?

In an oligopoly market structure, a few firms dominate the market, which is a defining characteristic of this type of market. These firms have significant market power, meaning their decisions regarding pricing and output can influence the rest of the market. The actions of one firm can directly affect the others, leading to strategic behavior and interdependence among the firms.

This market structure is contrasted with perfect competition, where many firms compete with identical products, or monopoly, where a single seller controls the entire market. Additionally, oligopolies often feature high barriers to entry, such as significant startup costs or regulatory constraints, making it difficult for new firms to enter the market easily. Therefore, the recognition of a few dominant firms shaping the market landscape is critical to understanding how oligopoly functions.