Textbook Notes (369,153)
United States (206,213)
Economics (994)
Chapter 17

Chapter 17 - Oligopoly

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Department
Economics
Course Code
Economics 10a
Professor
Gregory Mankiw

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Chapter 17: Oligopoly Markets with Only a Few Sellers ­ collusion: an agreement among firms in a market about quantities to produce or  prices to change ­ cartel: a group of firms acting in unison ­ cartel has to agree on total level of production and amount produced by each  member  ­ Nash equilibrium: a situation in which economic actors interacting with one  another each choose their best strategy given the strategies that all the other actors  have chosen ­ at Nash equilibrium, neither party has incentive to make different choice ­ oligopolists better off cooperating and reaching monopoly outcome but they  pursue their own self­interest that does not maximize their joint profit  ­ more difficult to reach agreement as cartel grows ­ output effect > price effect  ▯increase production ­ as oligopoly grows in size, magnitude of price effect falls ­ as number of s
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