AUECO101 Lecture Notes - Lecture 17: Monopoly Profit, Economic Equilibrium, Oligopoly
29 Nov 2017
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Market with only a few sellers: because an oligopolistic market has only a small group of sellers, a key feature of oligopoly is the tension between cooperation and self-interest. A duopoly example: to understand the behaviour of oligopolies let"s consider an oligopoly with only two member called a duopoly. The equilibrium for an oligopoly: let"s consider what happens if jack and jill decide separately how much water to produce. In this case, a total of 70l of water would be sold at a price of per litre market share. The economics of cooperation: prisoner"s dilemma: a particular game between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial (matrix on exam) Only two actions -2 players but 8 choices. Dominant strategy: if it is the best strategy for a player to follow regardless of the strategies pursued by other players confesses or remains silent.
