ECON 2000 Chapter : Chapter 11 Notes

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15 Mar 2019
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Chapter 11: oligopoly competition: oligopolists avoid price competition and instead pursue nonprice. Advertising: convince consumer that firm a"s product is better buy than those of its rivals. Playing the what if? game to consider the potential responses of rivals when formulating price or output strategies: requires creation of possible outcomes: payoff matrix, measuring market power, coordination. Concentration ratio: proportion of total industry output produced by largest firms. Industry with 60% is considered an oligopoly: oligopolies try to act like monopolies: finds output to maximize total industry profit. Requires each firm to agree to restrict its output and raise prices, no longer competing. Share occurs at individual profit max output: oligopoly, only few firms, big to size of market, barriers of entry are high. Each sells standardized product, but differentiate them (almost identical: each dominant firm has substantial market power, behavior.

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