ECO101H1 Lecture Notes - Lecture 12: Nash Equilibrium, Concentration Ratio, Monopolistic Competition
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Many industries fall somewhere between the polar cases of perfect competition and monopoly. Oligopoly: a market structure in which only a few sellers offer similar or identical products. Monopolistic competition: a market structure in which many firms sell products that are similar but not identical. Concentration ratio: the percentage of the market"s total output supplied by its four largest firms. o the higher the concentration ratio, the less competition: we now focus on oligopoly, a market structure with high concentration ratios. Strategic behaviour in oligopoly: a firm"s decisions about p or q can affect other firms and cause them to react. The firm will consider these reactions when making decisions. Game theory: the study of how people behave in strategic situations. One possible duopoly outcome: collusion: collusion: an agreement among firms in a market about quantities to produce or prices to charge.
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