ECON 1201 Lecture Notes - Lecture 23: Oligopoly, Imperfect Competition, Perfect Competition
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Our neck is stretched over the fence and opec has a knife - us president. An oligopoly is a market that is dominated by a small number of firms. Is complicated because it"s not a single firm considering its costs and pricing in a vacuum (like perfectly competitive firms and monopolies) The profits of a large firm depend heavily on the actions taken by other large firmsmutual interdependence. Imperfect competition: no one firm has a monopoly, but producers can affect market prices. Take notes on the kinked demand discussion. To get a better picture of market structure, economists often use the herfindahl- The hhi for an industry is the sum of the squares of each firm"s share of market sales. For example, if there are three firms with 60%, 25%, and 15% market share each: Hhh - 60^2 + 25^2 + 15^2 = 4,450. Hhi of less than 1000 indicates a strongly competitive market.
