01:220:102 Lecture Notes - Lecture 20: Tacit Collusion, Nash Equilibrium, Oligopoly
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Document Summary
A decision rule that describes actions a player will take. Representation of a game indicating the players, their strategies, and the payoffs resulting from alternate strategies. Best strategy regardless of your opponent"s strategy. Ignoring the effects of your choice on others. Efforts undertaken by govt to prevent oligopolistic industries from becoming or behaving like monopolies. Lever of concentration (lower number of firms, more conducive for collusion) Selling different product lines- where each one is priced makes it more difficult to collude. Smaller number of identical product lines across firms makes collusion easy. Difficult for large number of buyers to get together and demand better prices. Oligopolists often avoid competing directly on price, engaging in nonprice competition through advertising and product differentiation. Convince there is nothing like their produce out in the market. Trying to show how superior their product is in comparison to competitors. Focusing on a small section of the market, special characteristics.
