ECON 102 Lecture Notes - Lecture 8: Stackelberg Competition, Cournot Competition, Bertrand Competition
Document Summary
In commodities industries like oil, cement and sugar, building capacity is di cult and expensive. In technology-intensive industries, rms realize large gains from being. In consumer industries like retail gas, food, capacity is relatively inexpensive, so rms compete on price. In the fmcg and clothing industries, goods are very similar, and. The objective of today"s class is to analyze di erent types of oligopoly markets, and rms" strategic behaviour within these. Market price and structure is less important. Most actual markets have a few rms competing with each other with similar products. An oligopoly is a market with a small number of rms which is. Protected by barriers to entry such as government at, economies of scale or control of strategic resources. Characterized by interdependence, i. e. , managers explicitly consider reactions of rivals. Compete in prices with slightly di erent products. In commodities businesses, capacity is very expensive to set up. An oil rig cannot easily shut down production.
