ECO101H1 Lecture Notes - Lecture 11: Nash Equilibrium, Monopolistic Competition, Concentration Ratio
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Definition of oligopoly: a market structure in which only a few sellers offer similar or identical products . Definition of monopolistic competition: a market structure in which many firms sell products that are similar but not identical . Concentration ratio: the percentage of the market"s total output supplied by its four. Least amount of possible sellers: two sellers (duopoly most extreme case of oligopoly) Strategic behaviour in oligopoly defined in class: a firm"s decisions about price of quantity can affect others firms and cause them to react. The firms consider the reactions when making decisions. Game theory: the study of how people behave in certain situations. Definition of collusion: an agreement among firms in a market about quantities to produce or prices to charge . Definition of nash equilibrium in class: a situation in which economic participants interacting with one another each choose their best strategy given the strategies that all other have chosen .