Why are the firms said to be interdependent in an oligopoly market? Explain. 

An oligopoly is a market structure in which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. One of the main characteristics of oligopoly market is interdependence. Firms that are interdependent cannot act independently of each other. A firm operating in a market with just a few competitors must take the potential reaction of its closest rivals into account when making its own decisions. For example, if a petrol retailer wishes to increase its market share by reducing price, it must take into account the possibility that close rivals may reduce their price in retaliation. Firms that are interdependent cannot act independently of each other. A firm operating in a market with just a few competitors must take the potential reaction of its closest rivals into account when making its own decisions.