Market Structures & Competition Flashcards
(6 cards)
1
Q
what happens in Bertrand competition
A
firms undercut each other until P = MC
2
Q
how do firms compete in Cournot competition
A
they choose quantities
3
Q
how do firms compete in Stackelberg competition
A
one firm moves first, the follower reacts
4
Q
what is the first mover advantage in Stackelberg
A
the first mover can restrict the second firm’s output and earn higher profits
5
Q
what are P, Q, and Lerner Index in perfect competition
A
P = MC, Q is highest, L = 0
6
Q
how do markets rank in competitiveness (Lerner)
A
perfect comp and Bertrand (L=0), Stackelberg (mid), Cournot (higher L)
