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13 Cards in this Set

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  • Back
Oligopoly is a market structure in which;
a small number of firms compete
natural or legal barriers prevent entry of new firms.
In oligopoly, there is a small number of firms and each firm is large and can influence...
the market price, but no one firm can CONTROL the market price
Oligopoly has barriers to entry, and like monopoly can arise for natural or legal reasons, what is a natural oligopoly?
IT is a maret in which economies of scale exist but the output of a few firms is required to meet the market demand at the lowest possible cost.
A legal oligopoly...
arises when a legal barrier to entry protects the small number of firms in the market
Firms in oligopoly might produce what kind of product?
Identical or differentiated
What is the problem for a firm in oligopoly?
Its own profit maximizing actions might decrease the profits of its competitors. If all firms do this, then they all end up with lower profits.
What is a cartel?
One possible way of avoiding self defeating outcome for firms in oligopoly, it is a group of firms acting together, in collusion, to limit output, raise price, and increase economic profit. A cartel is illegal in the united states
What is duopoly?
a market in which there are only two producers.
The oligopoly market structure lies between...
perfect competition and monopoly
What is game theory?
It is the main tool that economists use to analyze strategic behavior, behavior that recognizes mutual interdependence and takes account of the expected behavior of others.
What 3 features do all games share?
Rules
Strategies
Payoffs
What is the prisoners dilemma?
A game between two prisoners that shows why its hard to cooperate, even when its beneficial to both players to do so. It captures the essential feature of the duopolists dilemma.
What is nash equilibrium?
an equilibrium in which each player takes the best possible action given the action of the other player.