Which market structure is characterized by a small number of firms holding significant market share?

An oligopoly is characterized by a small number of firms that hold significant market share, allowing them to have considerable influence over the market price and other factors affecting the industry. In this market structure, each firm is aware of the actions of the others, which can lead to strategic behavior such as collusion or price-setting agreements. The limited number of firms means that individual firms can impact market conditions, and their decisions are interdependent—meaning that the choices made by one firm directly affect the others.

This market structure stands in contrast to perfect competition, where many firms compete and none can influence prices; monopolistic competition, which involves many firms selling differentiated products; and monopoly, where a single firm dominates the market with no close substitutes. Each of these structures presents different characteristics regarding the number of firms and the level of market power. Oligopoly's distinctive feature of few firms and high market concentration sets it apart in terms of both competition and strategic decision-making.