Oligopoly

Question 1

Introduction

Answer 1

1) beween perf/monop
2) Identical products, compete price
3) Or differentiate product, compete quality

Question 2

Market structure

Answer 2

1) Nat/legal barriers entry
2) small number firms compete
3) Large share, tempted cooperate form cartel act mono

Question 3

Prisoners dilemma

Answer 3

1) Rules (dif rooms, both confess 3, alone 1, other 10)
2) Strategy (CC, DD, CD, DC)
3) Payoff (graph)
4) Outcome (use eq idea)
5) Nash eq (best confess both other person)
6) DIlema/bad outcome (contemplate deny)

Question 4

Prisoners dilemma: in terms economics

Answer 4

1) Form cartel restrict output, raise price/profit
2) illegal, strategy - comply cheat
3) Say demand decrease so reduce price increase quantity sold
4) Nash eq best cheat

Question 5

Game of chicken

Repeated/sequential

Answer 5

1) R & D, no/ both - not nash eq
- tit 4 tat (coop coop, cheat chear)
- strigger strat ( nash eq forvever after cheat)

Question 6

Antitrust law
Price fixing illegal
Trying arragements
predatory price
Mergers/acquistors

Answer 6

• regulate oligopolies behave mono (competition act, enterprise act)
• collude price fix, consumer suffer, surplus, ineffic, DWL
• buy one thing buy another, increase market power
• nock comp
• create larger girm (merger) buy another (acq) increase power