Oligopoly
Plain definition
A market dominated by a small number of large firms whose decisions depend on each other's expected reactions — strategic interdependence.
In economics
Oligopolists watch rivals closely: cutting prices can trigger a price war, so firms often compete on advertising, quality, or capacity instead. Game theory (prisoner's dilemma, kinked demand) models this mutual dependence, and collusion — explicit or tacit — is a constant temptation that antitrust law polices.
Example
Commercial airlines on a busy route, or mobile carriers in a country, form an oligopoly: a fare cut by one is quickly matched by the others.
Oligopoly is confused with monopoly. A monopoly has one seller with no strategic interaction; an oligopoly has a few sellers whose profits depend on anticipating rivals' moves. It is also distinct from monopolistic competition, where many firms sell differentiated products without such interdependence.