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cournot1 - Oligopoly Models Static vs dynamic models...

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ECO 171 Industrial Organization Oligopoly Models Static vs. dynamic models Characteristics of the markets Homogeneous products Differentiated products Strategic considerations: Decision variable role of prices vs. capacity choice Cournot (capacity choice/quantities) Bertrand (prices) Timing of decisions: Simultaneous moves Sequential moves (Stackleberg)
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ECO 171 Industrial Organization Overview Determination of price and market shares Two identical firms Many identical firms Two firms with different costs Key questions: How much total output and price? What determines the shares of firms Key concepts: Residual demand Reaction functions – Cournot equilibrium
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