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Unformatted text preview: 1 Oligopoly Oligopoly Oligopoly few firms limited entry one product could be due to cost conditions or barriers to competition oligopolists must recognize mutual dependence each firm takes other firms behavior into account oligopoly models depend on the nature of the interactions between firms 80 Oligopoly Oligopoly general results of oligopoly models p and q between that of competition and monopoly Quantity ($) Q M D P M Monopoly Outcome Q * Competitive Equilibrium P * with more oligopolists, closer to competitive equilibrium with collusion, closer to monopoly collusion difficult as number of firms increases there might be not stable equilibrium 80 game theory is used to predict the outcome of encounters between competing companies 1994 Nobel Prize in Economic Science for work in game theory Game Theory Game Theory Prisoners dilemma individual incentives lead to nonoptimal outcome cooperation would be better for both...
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