Week 11 - Oligopoly and Business Strategy Flashcards
(9 cards)
What is an ‘Oligopolistic market’? What is the unique thing about them?
There are only a few sellers, so the actions of any of them can have a large impact on the profits of all the others. They’re INTERDEPENDENT.
Define the term ‘Collusion’?
An agreement among firms in a market about quantities to produce or prices to charge.
Define the term ‘Cartel’ in terms of Microeconomics?
a group of firms acting in unison.
What is ‘Nash Equilibrium’?
a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen.
Define the term ‘Dominant strategy’?
a strategy that is best for a player in a game regardless of the strategies chosen by the other players.
What is ‘Resale price maintenance’?
When a wholesaler requires that its retailers do not sell its products to their customers below a specified retail price.
Define the term ‘Predatory pricing’?
When a firm sells its product at an artificially low price to drive out an efficient competitor and reduce long-run competition.
What does the ‘Prisoners’ dilemma’ illustrate?
It illustrates how self-interest can undermine cooperation, even when beneficial. This applies to oligopolies, advertising, arms races, and resource management.
What are Australia’s Competition Laws? What is their objective?
The Competition and Consumer Act 2010 makes it illegal for corporations to make a contract/arrangement that would substantially lessen competition. This means that it is illegal for oligopolists to work together to increase prices, reduce production, divide up a market or otherwise make a market less competitive.
