ECON 1000 Lecture Notes - Lecture 15: Oligopoly, Market Structure
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17 Nov 2017
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Econ1000: market structure in which natural or legal barriers prevent the entry of new firms. Either natural or legal barriers to entry can create oligopoly. Because an oligopoly market has only a few firms, they are interdependent and face temptation to cooperate. Interdependence: with a small number of firms, each firm"s profit depends on every firm"s actions. Temptation to cooperate: firms in oligopoly face the temptation to form a cartel (group of firms acting together to limit output, raise price, and increase profit, cartels are illegal) Game theory: is a tool for studying strategic behavior, which is behavior that takes into account the expected behavior of others and the mutual recognition of interdependence.
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