What term describes a market structure characterized by a few large firms dominating the market?

The term that describes a market structure characterized by a few large firms dominating the market is oligopoly. In an oligopoly, the actions of one firm directly influence the others due to the limited number of competitors. This leads to interdependent decision-making regarding prices, output, and marketing strategies among these firms. Oligopolies can result from high barriers to entry, which prevent new firms from easily entering the market, and often these few firms hold significant market power, allowing them to influence prices above competitive levels.

In contrast, a monopoly involves a single firm dominating the entire market without any competition, whereas monopsony refers to a market structure where there is only one buyer for numerous sellers, affecting purchasing power. Perfect competition describes a market with many firms offering identical products, where no single firm can influence the market price. Each of these structures operates under different conditions and assumptions, highlighting the specific nature of oligopoly as the correct answer in this context.