Class Notes - 12-5-07

Class Notes- - Microeconomics Class Notes Chapter 11 Oligopoly I Characteristics of Oligopoly 1 Few firms They will engage in Strategic Behavior 2

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Chapter 11 – Oligopoly I. Characteristics of Oligopoly 1. Few firms They will engage in Strategic Behavior 2. Differentiated or Homogenous Products 3. Barriers to entry a. Technology b. Legal barriers (Patents) c. Costs d. Example: Airline industry i. Technology - airplanes ii. Costs – huge II. There are Few Firms A. Every firm can influence market price 1. Which means that each firm can affect the profits of all firms 2. They will maximize their profits based on predicting the behavior of your competition – then choose your behavior accordingly B. This type of firm will maximize profits as a goal… 1. Based on what all other firms are predicted to do. C. Firms engage in strategic behavior 1. The action of the firm has to take into account the actions of all the other firms. 2. Behavior takes into account the actions of all other firms in the industry (same thing) D. We analyze Oligopoly behavior using “ GAME THEORY ” (which was
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This note was uploaded on 04/15/2008 for the course ECON 100 taught by Professor Stephaniemartin during the Fall '07 term at Allegheny.

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Class Notes- - Microeconomics Class Notes Chapter 11 Oligopoly I Characteristics of Oligopoly 1 Few firms They will engage in Strategic Behavior 2

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