ECON 111 Lecture Notes - Lecture 8: Fixed Cost, Marginal Cost, Nash Equilibrium

• School: Queen's University
• Department: Economics
• Course: ECON 111
• Professor: Ugurhan Gazi Berkok

Document Summary

Econ 111 lecture #8 imperfect competition and strategic behaviour. In order to do this, you must have market power. Consumers must also be willing to pay different prices. There must also be no arbitrage. This is because the quality is different, and so the cost must also be. Price discrimination among market segments. Consider a car company making cars in japan. Now consider selling these cars in two different market segments, where consumers are willing to pay different prices. These two market segments are shown by the two separate graphs in the figure below. M while in the second they are sold at the lower price of pb. Chapter 11: imperfect competition and strategic behavior. We first define the difference between monopolistic competition and an oligopoly. Monopolistic competition: monopolistic competition is best understood by thinking of restaurants. Italian, thai, french, vietnamese restaurants all offer very different things but they are still in competition with each other.