ECON-101 Lecture Notes - Lecture 17: Oligopoly, Nash Equilibrium, Resale Price Maintenance
6 Apr 2016
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Document Summary
See what market structures lie between monopoly and compeiion. Examine what outcomes are possible when a market is an oligopoly. Learn about the prisoners" dilemma and how it applies to oligopoly and other issues. Consider how compeiion laws try to foster compeiion in oligopolisic markets. Firms collude [get together to determine output/price (even though its against the law)] Examples: beer industry, tobacco industry, skates, banking, transportaion, etc. All these irms use game theory : if firm a, increases price, firm b should maintain lower prices (don"t match, if firm a, lowers price, firm b must also lower prices (match) Prisoners" dilemma: a paricular game between two captured prisoners that illustrates why cooperaion is diicult to maintain even when it is mutually beneicial. Dominant strategy: a strategy that is best for a player in a game regardless of the strategies chosen by other players.
