Week 8 Flashcards

(11 cards)

1
Q

Oligopoly features

A

few sellers
interdependent firms
prices are set above marginal cost

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2
Q

What happens when they act as a monopoly

A

maximises profits for the group

increase firm profit at other expenses

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3
Q

Duopoly

A

Only two members eg; water utility

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4
Q

Collusion

A

Agreement among other firms in a market to produce or price to charge

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5
Q

Cartel

A

Group of firms acting in unision

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6
Q

Why can’t they act as cartels

A

Competition laws prohibit explicit agreement among oligopolists due to public policy

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7
Q

Nash Eq

A

Each player chooses their best strategy

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8
Q

Self interest

A

generates price war

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9
Q

Effect of increasing number of sellers

A

Oligopolist market will look like a competitive market
price approaches marginal cost
the quantity produced approached the socially efficient level

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10
Q

Oligopolies are a type of ….

A

Prisoners dilemma; Self-interest makes it difficult for the oligopoly to maintain a cooperative outcome with low production, high prices and monopoly profits.

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11
Q

Public policy towards oligopoly

A

Cooperation is deemed not wanted by society because production will be too low and pries will be too high

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