Which market structure is characterized by a small number of firms exerting substantial influence over an industry?

The correct answer is oligopoly because this market structure is specifically defined by the presence of a few firms that dominate the market. In an oligopoly, the actions of one firm can significantly impact the others in the industry, leading to a high degree of interdependence among the firms. This means that each firm must consider the potential reactions of its rivals when making decisions regarding pricing, output, and other strategic choices.

In contrast, monopolistic competition involves many firms competing with differentiated products, which results in less market power for any single firm. Pure competition features a large number of sellers offering identical products, such that no individual firm can influence the market price, emphasizing the lack of substantial control. A monopoly, while allowing a single firm to exert significant influence over the market without direct competition, does not fit the description of a market with multiple firms. Thus, oligopoly is the best fit for a market structure characterized by a small number of firms having considerable influence within the industry.