Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: rofits but in the long run, their economic profit = 0. When looking at Oligopolies at a whole, this is the Nash solution. – Regardless of what the other firms do, each firm has an individual incentive to price low – However, this results in the lowest profits for the oligopoly as a whole. Actions for firms: Act Actions for firms: Act Independently However, when looking at society as a whole, Oligopolies who act independently maximize social welfare. If firms are acting like a competitive market, quantity supplied is high and price is low, and there exists no DWL; just like in a competitive market. 10 Nash Equilibrium and Pareto Optimum The decisions of an Oligopoly can be expressed in a game. – For example,...
View Full Document

This document was uploaded on 03/23/2014.

Ask a homework question - tutors are online