What is a primary characteristic of an oligopoly?

A primary characteristic of an oligopoly is that a few firms control a large portion of market share. In this type of market structure, a small number of firms hold significant market power, which allows them to influence prices and output levels. The interactions among these firms often lead to strategic behavior, whereby the decisions of one firm significantly affect the others.

In an oligopoly, competition is not purely based on price, as firms may engage in non-price competition through advertising, product differentiation, and customer loyalty programs. The limited number of firms can lead to higher prices compared to a perfectly competitive market due to reduced competitive pressure.

While barriers to entry can be high in an oligopoly, it is not the defining characteristic that distinguishes this market form from others, such as monopolies or competitive markets. Hence, the concentration of market share among a few firms is what primarily characterizes oligopolistic markets.