Final answer:
An industry dominated by a few firms that are mutually interdependent is an oligopoly, characterized by strategic decision making and a balance between competitive actions and collusion.
Step-by-step explanation:
An industry that is dominated by a few firms, where each firm is aware that its choices affect the choices of its rivals and vice versa, is known as an oligopoly. This market structure arises when a small number of large firms control all or most of the sales within an industry. Oligopolistic markets are characterized by mutual interdependence and decision-making that takes into account the actions of other firms. Examples of oligopoly include the auto industry, cable television, and commercial air travel. Firms in such markets may either compete aggressively with one another, acting like perfect competitors, or collude to act like a monopoly, thereby increasing prices and profits. The choices oligopolistic firms make regarding output, pricing, and other strategic decisions are influenced by the prospects of competition versus collusion.