oligopoly-ho - Oligopoly Chapter 27 What is Oligopoly...

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Oligopoly Chapter 27
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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
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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?
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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
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Oligopoly models Considerations: Do firms compete on price or quantity?
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