EC260 Lecture Notes - Lecture 16: The Home Depot, Trigger Strategy, Nash Equilibrium

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Ec260 lecture #16: chapter 9 supplement & game theory: inside oligopoly. Table 13. 1 properties of monopoly, oligopoly, monopolistic competition, and competition. Comparison of collusive, cournot, stackelberg, and competitive equilibria: how would american and united behave if they colluded? they would maximize joint profits by producing the monopoly output, 96 units, at the monopoly price, per passenger. Figure 13. 6(a) duopoly equilibria: start at the cournot equilibrium, aa wants more money so they start lower. 10,15: what should player 2 do? a b c. 13,14: 2 has no dominant strategy, but 2 should reason that 1 will play a therefore 2 should choose c. The outcome this outcome is called a nash equilibrium. A is player 1"s best response to c . C is player 2"s best response to a . *, s2) for all s2 look for dominant strategies: put yourself in your rival"s shoes.

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