Pure or Perfect Oligopoly: If the firms produce homogeneous products, then it is called pure or perfect oligopoly. Though, it is rare to find pure oligopoly situation, yet, cement, steel, aluminium and cemicals producing industries approach pure oligopoly.
Imperfect or differentiated oligopoly: If the firms produce differentiated products, then it is called differentiated or imperfect oligopoly. For example, passenger cars, cigarettes or soft drinks. The goods produced by different firms have their own distinguishing characteristics, yet all of them are close substitutes of each other.
The "interdependence between the firms" feature of the oligopoly can be explained as follows:
Firms under oligopoly are interdependent. Interdependence means that actions of one firm affect the actions of other firms. A firm considers the action and reaction of the rival firms while determining its price and output levels. A change in output or price by one firm evokes reaction from other firms operating in the market.
For example: market for cars in India is dominated by few firms( Maruti, Tata, Hyundai, Ford, Honda,etc.). A change by one firm (say, Tata) in any of its vehicle( say, Indica) will induce other firms( say, Maruti, Hyundai,etc) to make changes in their respective vehicles.
