oligopoly-ho

oligopoly-ho - Oligopoly Chapter 27 February 9, 2010 What...

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Unformatted text preview: Oligopoly Chapter 27 February 9, 2010 What is Oligopoly? Oligopoly is a kind of market structure, like monopoly or perfect competition An oligopolistic industry is an industry consisting of a few firms (duopoly = two firms) Example industries: auto, operating systems, mp3/music players, airlines Questions How can we analyze an oligopolistic industry? How are the market prices and quantities determined? How does this impact welfare? How do we think about competition among oligopolists? Why might firms want to collude (form a cartel)? How can a cartel be sustained? We use Game Theory to Study Oligopoly With PC and monopoly market structures, we analyze a firm making an individual decision PC: very many firms, one firm’s actions do not impact others Monopoly: only one firm, no one else to impact However, oligopoly: each firm’s p , q decisions affect competitor’s profits Strategic interaction/interdependence = ⇒ apply game theory Oligopoly models Considerations: Do firms compete on price or quantity? Do firms act sequentially (leader/followers) or simultaneously (equilibrium) Stackelberg models: quantity leadership...
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This note was uploaded on 03/17/2010 for the course ECON 100B taught by Professor Kilenthong during the Spring '08 term at UCSB.

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oligopoly-ho - Oligopoly Chapter 27 February 9, 2010 What...

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