An oligopolistic market structure is distinguished by several characteristics, one of which is neither homogeneous or differentiated products. What are some other characteristics of this market structure? (Mark all that apply and explain why.)

a) Difficult entry

b) Market control by a few large firms

c) neither mutual interdependence nor mutual dependence

d) Mutual interdependence

e) Market control by many small firms.

• a) Difficult entry.

It is difficult for new competitors to enter the market because the incumbent firms often intensify barriers to market entry. Barriers to market entry in this type of market come from high initial costs.

• b) Market control by a few large firms.

Under oligopoly, a few firms may account for over 80% of the total market size. As a result, such firms have the power to influence the market, such as lowering the price to keep competitors out of business.

• d) Mutual interdependence.

Mutual interdependence exists in an oligopoly because the actions of one company affect the business of other firms. For instance, if a firm makes changes in its marketing strategies or prices, the sales of other companies will be impacted. Therefore, the companies are often keen to watch the actions of their rivals.