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16 Cards in this Set
- Front
- Back
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oligopoly |
an industry with only a small number of producers |
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imperfect competition |
when no one firm has a monopoly but producers realize that they can affect market prices |
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duopoly |
an oligopoly consisting of only two firms |
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collusion |
when sellers cooperate to raise their joint profits |
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cartel |
an agreement among several producers to obey output restrictions in order to increase their joint profits |
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interdependence |
when a firm's decisions significantly affect the profits of other firms in the industry |
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game theory |
the study of behavior in situations of interdependence |
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player's payoff |
the reward received by the player in a game, such as the profit earned by an oligopolist |
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payoff matrix |
shows how the payoff of each participant depends on the actions of both |
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prisoners dilemma (2) |
1. each player has an incentive to choose an action that benefits itself at the others expense 2. when both players act in this way, both are worse off than if they acted cooperatively |
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dominant strategy |
when it is a player's best action regardless of the action taken by the other player |
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nash equilibruum |
when each player in a game chooses the action that maximizes they payoff and ignores the effects of their action on the payoff received by the other player |
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strategic behavior |
when a firm attempts to influence the future behaviors of other firms |
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tit for tat |
players play cooperatively at first, then do whatever the other player did in the previous period |
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antitrust policy |
consists of efforts undertaken by the government to prevent oligopolistic industries from becoming or behaving like monopolies |
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price war |
tacit collusion breaks down and prices collapse |
