ECON 305 Lecture Notes - Lecture 3: Oligopoly, Tacit Collusion, Nash Equilibrium
11 Dec 2014
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For the same market demand and (constant) unit costs, each of the four models has a different: That in light of evidence of widely varying firm behaviour in oligopolistic industries, in i-o we must be careful if we wish to apply oligopoly models. Chamberlin (q) < cournot (q) cournot (p) > stackelberg (p) > social optimum (p) Chamberlin < cournot (cp) < stackelberg (cp) < social optimum (cp) The different oligopoly models reach different outcomes because there are different assumptions regarding: The richness of oligopoly behaviour and outcomes may be illustrated by varying the environment in which their rivalry is played out, such as: Supergames: repeated games where players know their rivals" previous actions and condition their actions on those. Each firm can influence rival"s behaviour by signalling and threatening to punish. Price will tend to be higher than in a single period game.
