ECON-101 Lecture Notes - Lecture 13: Oligopoly, Perfect Competition, Strategic Dominance
18 Jan 2016
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Oligopoly few key firms are in this market. Very vicious with entry/ exit: dupoply 2 firms in market, strategy is very important, competes with other firms. Ex) if pepsi advertises more, so does coke. In perfect competition ar = mr = p, because everyone has equal access, so solution would be q = 120, p = 0, profit = 0. Ex) in monopoly solution would be: q = 60, p = 60, profit = Ex) if 2 people own the source 50/50, eaxh q = 30, p = 60, Q = 40, p = 40, profit = 1600. Nash equilibrium: when both parties reach that point they have no incentive to move from that point, considered their equilibrium. Game theory: created by generals, trying to gain the upper hand by strategy. Dominant strategy: the strategy in which a party will make regardless of what the other party does.
