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9 Cards in this Set

  • Front
  • Back
oligopolistic industry
few BIG BUSINESSES controlling the industry
effect of few firms in an industry
interdependence --> whatever one firm does directly affects all the other firms in the industry
barriers to entry in an oligopolistic competition
large start-up costs and behavior of oligopolists
reason for the kinked demand curve in a noncollusive model
assymetry in response to a change in price; two demand curves with two different elasticities

below the kink - everybody lowers the price
above the kink - nobody wants to raise the price
define: tacit collusion/quiet collusion
if the price leader raises the price, all the firms in the industry match the price leader's higher price

--> DO NOT DISCUSS price change
define: overt collusion
firms get together and discuss output and prices
one thing that cartel and monopolies do similarly
cut output and raise prices
one major flaw of the cartel system
free riders --> letting others cut output, for newly formed members can take advantage of the higher price
define: Nash equilibrium
also called the maximin solution; outcome is close to a competitive outcome - price is relatively low and profits are relatively low.