L22 - Market structure Market structures N L22 1 2 3-10 10 Name pall Oligopoly Oligopolies in practice Examples of oligopolies in the USA

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1 L22 Oligopoly Market structure Market structures: ± Oligopoly – industry with 2 or more large sellers. ± Intermediate level of fixed cost ± Have market power (but smaller than monopoly) ± Also: oligopsony and bilateral oligopoly pall Name 10-… 3-10 2 1 N Oligopolies in practice ± Examples of oligopolies in the USA: - accounting & audit services, tobacco, beer, aircraft, military equipment, motor vehicle, film and music recording industries ± Inefficiency and regulation (Trade Commission) ± Industry is legally recognized as oligopolistic 1. concentration ratio “big four”>40% (share of top 4 firms in the market) 2. HERFINDAHL-HIRSCHMAN index>1000 ± Mergers not allowed in concentrated industries IO - Models ± Strategic environment – harder than before ± Careful about timing and strategy ± Quantities - chosen simultaneously (Cournot) - leader and follower (Stackelberg) ± Prices (Bertrand) ± When goods are not homogenous - Monopolistic competition i y
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2 Cournot Model - Assumptions ± Homogenous good ±
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This note was uploaded on 06/04/2011 for the course ECON 301 taught by Professor Hansen during the Spring '08 term at Wisconsin.

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L22 - Market structure Market structures N L22 1 2 3-10 10 Name pall Oligopoly Oligopolies in practice Examples of oligopolies in the USA

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