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4. Can you think of an industry that is dominated by only 2-3 firms? What is the nature of the product? Would it be easy to begin offering the product or service? Do you feel that the prices of the products they are offering are fair?

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Chika Ilonah
Chika IlonahLv10
28 Sep 2019
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Related questions

A duopoly is the most basic form of oligopoly, a market dominated by a small number of companies.

Below are the most famous "duopoly" businesses: Coca-Cola vs. Pepsi Boeing vs. Airbus Intel vs. AMD Select one of these "duopolies" and describe it in this discussion board.

  1. What is the nature of these business?
  2. What is their main product/service?
  3. Which company is bigger?
  4. How do these businesses differentiate their products?
  5. Is the competition fierce in your opinion?
  6. What are the main barriers to entry?
  7. Do you think either of these companies will dominate the other in the long run?

I need help with e-h

Two firms set prices in a market with demand curve Q = 6 − p, where p is the lower of the two prices. If firm 1 is the lower priced firm, then it is firm 1 that meets all of the demand; conversely, the same applies to firm 2 if it is the lower priced firm. For example, if firms 1 and 2 post prices equal to 2 and 4 dollars, respectively, then firm 1–as the lower priced firm–meets all of the market demand and, hence, sells 4 units. If the two firms set the same price p, then they each get half of the market, that is, they each get 6−p . Suppose that prices can only be quoted in dollar units, such as 2 0, 1, 2, 3, 4, 5, or 6 dollars. Suppose, furthermore, that costs of production are zero for both firms. Finally, suppose that firms want to maximize their own profits.

(a) Show that the strategy of posting a price of 5 dollars weakly dominates the strategy of posting a price of 6 dollars. Does it strictly dominate as well?

(b) Are there any other (weakly) dominated strategies for firm 1? Explain.

(c) Is there a dominant strategy for firm 1? Explain.

(d) Suppose for a moment that this market had only one firm. Show that the price at which this monopoly firm maximizes profits is 3 dollars.

(e) Can you give a reason why–in any price competition model–a duopoly firm would never want to price above the monopoly price? (Hint: When can a duopoly firm that prices above the monopoly price make positive profits? What would happen to those profits if the firm charged a monopoly price instead?)

(g) Show that when we restrict attention to the prices 1, 2, and 3 dollars, the (monopoly) price of 3 dollars is a strictly dominated strategy. (h) Find the outcome of iterated elimination of (weakly) dominated strategies.

(h) Find the outcome of iterated elimination of (weakly) dominated strategies.

1. The assumptions of perfect competition imply that:

a) Individuals in the market accept the market price as given.

b) Individuals can influence the market price.

c) The price will be fair.

d) The price will be high.

2. Monopolistic competition describes an industry characterized by a ____ number of firms producing____ products with ____ for firms:

a) Small; identical; barriers to entry.

b) Small; similar; relatively easy entry.

c) Large; similar; relatively easy entry.

d) Large; identical; relatively easy entry.

 

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