ECONO-2202 Lecture Notes - Lecture 12: Nash Equilibrium, Sequential Game, Simultaneous Game
Document Summary
It measures the sum of the squared market shares of each firm in the industry so that much larger weight is given to firms with high market shares. A high herfindahl index number indicates a high degree of concentration in one or two firms. A lower index might mean that the top four firms have rather equal shares of the market, for example, 25 percent each (25 squared 4 = 2,500). Strategic behavior can come in the form of pricing decisions, product differentiation, or through creative marketing (creating perceived product differences). It can apply to either competitive or collusive behavior (including cheating on collusive agreements). Oligopoly behavior: a game theory overview: oligopoly behavior is similar to a game of strategy, such as poker, chess, or bridge. Each player"s action is interdependent with other players" actions. Game theory can be applied to analyze oligopoly behavior.
