01:220:102 Chapter Notes - Chapter 14: Normal-Form Game, Imperfect Competition, Perfect Competition
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13 Feb 2018
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An oligopoly is an industry with only a small number of producers. Not a monopoly, firms compete; but producers can alter market price- aka imperfect competition. Has increasing returns to scale which give bigger producers a cost advantage over smaller once. U. s justice department and federal trade commission, have the job of enforcing antitrust policy. Far more common that perfect competition or monopoly. An oligopoly consisting of only 2 firms is a duopoly. These firms could produce by engaging in collusion. : organization of petroleum exporting countries (opec: cartels among firms are illegal in the u. s. These firms could make the agreements to collude with each other but they have the incentive to break its word and produce more than the agreed-upon quantity. Firms have an incentive to produce more than the quantity that maximizes their joint profits because neither firm has a strong incentive to limit its output as a true monopolist would.
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