BIOC 212 Chapter Notes - Chapter 1-11: Profit Maximization, Marginal Revenue, Demand Curve
17 Aug 2018
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Price leadership model (tacit/informal collusion) (sequential price setting game) Characteristics of oligopoly: an oligopoly has few sellers and barriers to entry. Equilibrium in the market: firms are doing the best they can and have no reason to change their decision such as output or price, this described an equilibrium in any market, e. g. , competitive, monopoly, and monopolistic markets. Price in economics for pioneering work in game theory. Chapter 12: to solve for the equilibrium in an oligopoly market, we have to use the techniques of game theory from chapter 12, in this chapter, we will solve the pro t-maximizing output and price of cournot model. Oligopoly models : cournot model: for simplicity, we assume that there are two rms competing in the market. Rm has to forecast what the other rm"s output will be in order to make decision itself: given its forecast, each rm then selects a pro t-maximizing output for itself.
