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Unformatted text preview: 17 Book Notes Econ 201 Oligopoly: a market structure in which only a few sellers offer similar identical products Game Theory: the study of how people behave in strategic situations Oligopolies are interdependent. Strategic thinking of what others will think Game theory is only important in oligopolies A key feature of oligopoly is the tension between cooperation and self-interest. Duopoly example:- Simplest type of oligopoly- Jack v. Jill Collusion: an agreement among firms in a market about quantities to produce or prices to change Cartel: a group of firms acting in unison A cartel must agree on:- Total level of production- Amount produced by each member Antitrust laws prohibit explicit agreements among oligopolists as a matter of public policy. If the duopolists individually pursue their own self-interest when deciding how much to produce, they produce a total quantity greater than the monopoly quantity, charge a price lower than the monopoly price, and earn total profit less than the monopoly profit. the monopoly quantity, charge a price lower than the monopoly price, and earn total profit less than the monopoly profit....
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