In which market structure do few large firms dominate the market?

In an oligopoly, the market is characterized by a small number of large firms that hold a significant share of the market. This concentration results in these few firms having substantial market power, allowing them to influence prices and output levels. The behavior of one firm can significantly impact the others, leading to strategic interactions among the firms. Common characteristics of oligopolies include barriers to entry that protect these dominant firms and a tendency for firms to collude, either explicitly or implicitly, to maximize collective profits.

In contrast, monopolies consist of a single firm that dominates the market, while pure competition features many firms with no single one capable of affecting market prices. Monopolistic competition includes many firms as well, but each sells differentiated products, which gives them some degree of market power. Thus, the defining feature of an oligopoly is its few large firms that dominate the market, making this the correct answer.