Economics 1021A/B Lecture Notes - Lecture 22: Monopoly Profit, Game Theory

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Nicholas Kahnert

Document Summary

**he shortened up chapter 15 check updated reading list. Natural or legal barriers prevent the entry of new firms. In part (a), there is a natural duopoly a market with two firms. Either natural or legal barriers to entry can create an oligopoly. A legal oligopoly might arise even where the demand and costs leave in part (b), there is a natural oligopoly market with three firms room for a larger number of firms. Strategic behavior considers the expected behavior of others and the mutual recognition of interdependence. We can tabulate these outcomes in a payoff matrix. A player behaving rationally (in pursuit of their own best interest), chooses the best possible action given all possible actions taken by the other player. If both players are rational and choose their actions in this way, the outcome is an equilibrium called a nash equilibrium first proposed by john nash.