Explain and Discuss. An oligopoly is a market with only a few sellers, each offering a product similar or identical to the others. If the product is homogenous, there is a pure oligopoly. If the product is differentiated, there is a differentiated oligopoly. Since there are only a few sellers of a product, the actions of each seller affect the others. That is, the firms are usually mutually interdependent. The key point to make regarding markets price and output decisions are that there is no single theory of oligopoly (equivalent to that of perfect competition or monopoly) that exists because the behaviour of oligopolistic firms are determined by the strategic reaction and behaviour of their rivals and these reactions will differ according to the market situation. Therefore the markets price and output decisions are indeterminate