Ch27 notes

Ch27 notes - Ch. 27 Oligopoly: market structure...

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Ch. 27 Oligopoly : market structure characterized by a few firms that recognize their strategic interdependence. Middle ground between monopoly and perfect competition. Duopoly : special case of oligopoly with 2 firms competing strategically with each other in the market(s) for the good(s) they both produce. price leader -one firm gets to sets price before the other firm, the price follower . quantity leader -one firm chooses its quantity first, followed by the quantity follower . simultaneous game -firm has to guess about other firm's choice to make a sensible decision itself. possibilities to each simultaneously choose prices or each simultaneously choose quantities. 4 possibilities are: 1. quantity leadership 2. price leadership 3. simultaneous quantity setting 4. simultaneous price setting collude game) price leadership situation, in equilibrium, the follower must always set the same price as the leader. leader-follower
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This note was uploaded on 04/28/2008 for the course ECON 306 taught by Professor Cramton during the Fall '06 term at Maryland.

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Ch27 notes - Ch. 27 Oligopoly: market structure...

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