Final answer:
An oligopoly is a market structure with a small number of large firms that have significant control over the market and prices. It contrasts with a monopoly, where one firm dominates, and with a thick market with many participants. Thin markets occur when buyers and sellers are limited and information is imperfect.
Step-by-step explanation:
The market situation described in the question refers to an oligopoly, which is defined as a market structure in which a few large firms dominate the market, often with high barriers to entry for new competitors. These firms have significant market power and can influence the price of the product or service they sell. In contrast to a monopoly, where only one firm controls the entire market, an oligopoly consists of several companies.
When the number of buyers and sellers in a market is limited, it is sometimes referred to as a thin market. On the other hand, a thick market is characterized by the presence of many buyers and sellers. Markets can become thin due to severe imperfect information, which can discourage participation and lead to fewer transactions at agreed-upon prices. In an oligopoly, firms may attempt to act in a manner similar to a monopolist by forming a cartel to reduce output and raise prices, thereby increasing profits. However, such collusion is often unstable and illegal.