ECON 2304 Lecture Notes - Lecture 17: Clayton Antitrust Act, Sherman Antitrust Act, Predatory Pricing
20 Nov 2016
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Measuring market concentration: concentration ratio percentage of the market"s total output supplied by its four largest firms. Oligopoly is a market structure with high concentration ratios. Oligopoly: oligopoly market structure in which only a few sellers offer similar or identical products. Firm"s decision about p or q can affect other firms and cause them to react. Difficult entry: game theory the study of how people behave in strategic situations. Example: cell phone in small town: duopoly: at&t and verizon, fc = sh, mc = . Profit > 0: collusion agreement among firms in a market about quantities to produce or prices to charge, cartel group of firms acting in unison. Self-interest: firms would be better off if they stick to their cartel agreement. But each firm has an incentive to not stick to the agreement: lesson. It is difficult for oligopoly firms to exist.
