All Flashcards
Analyze the kinked demand curve for an oligopoly.
The demand curve is more elastic above the current price (competitors don't match price increases) and more inelastic below the current price (competitors match price decreases).
What are the differences between oligopoly and monopolistic competition?
Oligopoly has few firms, high barriers, and interdependence. Monopolistic competition has many firms, low barriers, and differentiated products.
What are the differences between oligopoly and monopoly?
Oligopoly has a few dominant firms, while a monopoly has a single firm. Oligopolies have interdependent decision-making, while monopolies do not.
What are the differences between a dominant strategy and Nash Equilibrium?
A dominant strategy is the best choice for a firm regardless of the other firm's actions. Nash Equilibrium is a stable state where no player can unilaterally improve their position.
What are the differences between collusion and non-cooperative behavior in oligopolies?
Collusion involves firms cooperating to maximize joint profits, while non-cooperative behavior involves firms acting independently in their own self-interest.
What are the differences between price competition and non-price competition in oligopolies?
Price competition involves firms competing based on price, while non-price competition involves competing based on factors like advertising, product differentiation, and customer service.
What are the differences between a duopoly and an oligopoly with multiple firms?
A duopoly involves only two firms, making strategic interactions simpler to analyze. Oligopolies with multiple firms have more complex interactions.
What are the key differences between perfect competition and oligopoly?
Perfect competition has many small firms, homogeneous products, and no market power, while oligopoly has few large firms, differentiated products, and some market power.
What is the definition of an oligopoly?
A market structure dominated by a few large firms with high barriers to entry.
What is a colluding oligopoly (cartel)?
Firms communicate and act as a single entity to control prices and output.
What is a non-colluding oligopoly?
Firms compete and do not cooperate, often practicing price leadership.
What is game theory?
The study of how people behave in strategic situations.
What is a 'game' in game theory?
Any situation where the outcome depends on the actions of two or more decision-makers.
What is a payoff matrix?
A table that shows the actions of two firms and the payoffs (usually profit) for each combination of choices.
What is a dominant strategy?
The best strategy for a firm, regardless of what the other firm does.
What is Nash Equilibrium?
A stable state where no player can unilaterally improve their position.
What is price leadership?
When the dominant firm initiates a price change, and other firms either follow or ignore.
What is a kinked demand curve?
A demand curve that is more elastic for price increases and more inelastic for price decreases.