In economics, an oligopoly is a market structure dominated by a small number of large firms whose decisions influence one another.
Because only a few significant sellers exist, each firm must consider how rivals may respond to changes in price, output, advertising, or product design. This strategic interdependence distinguishes an oligopoly from a market with many small sellers.
Oligopolies may compete vigorously, but firms can also attempt to coordinate their behavior. An explicit agreement among competitors to fix prices or restrict supply is generally illegal in many jurisdictions and is known as a cartel. Tacit coordination can be harder to identify because it may arise without a written agreement.
The term does not require a specific number of firms or identical products. Some oligopolies sell standardized goods, while others sell differentiated brands. Barriers to entry, such as high capital costs, patents, network effects, or control of essential resources, often help established firms maintain their positions.