Final answer:
An oligopoly market structure is defined by a few large firms dominating the market, high barriers to entry that prevent new competitors, and the potential for firms to offer differentiated products that create brand loyalty and pricing power.
Step-by-step explanation:
In an oligopoly, several conditions exist that define its market structure. Three such conditions include the presence of a few large firms, high barriers to entry, and the potential for differentiated products.
Oligopolies are characterized by a market dominated by a small number of large firms, which together control a significant portion of the market share, often resulting in combined market power that can be as high as 70-80%.
High barriers to entry, such as substantial initial capital investment, economies of scale, and government policies, prevent smaller firms from entering the market and competing effectively.
Additionally, firms in an oligopoly may produce differentiated products that enable them to have a certain degree of pricing power and brand loyalty among consumers.
This product differentiation can stem from features, branding, quality, or other characteristics that set each firm's products apart from those of its competitors.