What best defines an oligopoly?

An oligopoly is best defined as a market characterized by a few dominant sellers. This market structure is distinct from others because the small number of firms allows them to have significant influence over pricing and market outcomes. In an oligopoly, these firms are interdependent; the actions of one firm can directly affect the others, leading to strategic decision-making based on the expected reactions of competitors.

This contrasts with other market structures, such as perfect competition, where many small sellers operate independently without the power to influence market prices, or monopoly, where only one seller dominates the market. The presence of only a few dominant sellers often leads to market effects like price collusion, product differentiation, and barriers to entry, which further distinguish oligopolistic markets from those typified by greater competition or singular control.