Final answer:
Oligopolies are markets dominated by a few large firms, where each firm takes into account its competitors' decisions. Their key feature is mutual interdependence, leading to strategic behaviors influencing pricing and output decisions.
Step-by-step explanation:
A distinguishing feature of oligopolies is that firms take account of the reactions of their competitors to their output decisions. This behavior is due to the mutual interdependence characteristic of oligopolistic markets, where a few large firms dominate and where decisions regarding output, pricing, and marketing strategies are heavily influenced by the actions of other competitors in the market. Since oligopolists cannot legally enforce contracts to act collectively as monopolies, they often keep a close watch on each other's production quantities and prices, or they might put pressure on each firm to adhere to an agreed-upon output level. This strategizing can lead to a range of competitive behaviors, from intense competition to collusion, which in turn influences market prices and profit levels.