Final answer:
Mutual dependency is a characteristic of oligopoly, a market structure where a few large firms have significant market power and make strategic decisions based on each other's actions.
Step-by-step explanation:
Mutual dependency is a characteristic of oligopoly. This market structure arises when a few large firms dominate most of the sales within an industry, creating an environment where decisions such as output, price, and advertising are strategically made based on the actions of competitors. Examples of oligopolistic markets include commercial aircraft, where Boeing and Airbus are dominant, and the U.S. soft drink industry, controlled by Coca-Cola and Pepsi.
These firms face the choice of competing against each other to drive down prices, which might lead to minimal profits akin to a purely competitive market, or colluding as if they were a single monopolist and potentially earning higher profits. Oligopolies are characterized by high barriers to entry and strategic decision-making that is significantly influenced by the decisions of the other oligopolistic firms.