Oligopoly - Oligopoly Chapter17 Oligopoly Characteristics...

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Oligopoly Chapter 17
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Characteristics Only a few sellers Offer similar or identical products High barriers to entry A crucial feature of oligopoly is the interdependence between firms’ decisions. Oligopoly
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In oligopoly, the industry is made up of only a few firms. Each of these firms makes up a significant part of the total market. Each can exercise some market power (eg. their output decisions influence the market price). Therefore, each firm’s decisions influence the decisions made by the other firms. In other words, firms’ decisions are interdependent. Interdependence between firms
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Non-price competition… is common in oligopoly, such as: advertising, product innovation, improvement of service to customers. is preferred to price wars which usually bring losses to all parties.
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Game Theory A model of strategic moves and countermoves of rivals (how people behave in strategic situations). Firms chooses strategies based on their assumptions about competitors likely behaviour or response. Strategies could relate to pricing, advertising, product range, customer groups etc. Game theory provides a framework or model to help analyse this behaviour .
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Game Theory Nash equilibrium Economic actors interacting with one another Each choose their best strategy Given the strategies that all the other actors  have chosen Dominant strategy Strategy that is best for a player in a game Regardless of the strategies chosen by the other  players 6
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Classical Prisoners’ Dilemma Bob and Jane are suspects in a murder case. The police 
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This note was uploaded on 02/08/2012 for the course TFTGFT 012 taught by Professor Hfyfgy during the Winter '11 term at Alaska Bible.

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Oligopoly - Oligopoly Chapter17 Oligopoly Characteristics...

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