BEPP 250 Lecture Notes - Lecture 18: Imperfect Competition, Ajinomoto, Lysine
8 Apr 2015
School
Department
Course
Professor
Document Summary
Bepp 250 - business & economic public policy - lecture 18 imperfect competition. We can use game theory to model firm strategy: need to specify players, information, moves, payoffs. There are many models of imperfect competition, because it is not clear what we should assume the actions are. Bertrand: the most common realistic empirical models are differentiated products where firms choose prices (popularized by seminal 1995 paper automobile. This is now a staple model in economics, marketing, operations research. Cournot: firms simultaneously choose quantities, not prices, and sell identical products and have identical cost functions. Because it is easier, we will be focusing on quantity competition. Stackelberg: one firm leads by choosing its quantity and the other firms then choose their quantities. Ex) demand for lysine (m of lb, and price in $/lb) p(y) =1. 5 y/200. Two firms, ajinomoto and adm: mc1 = mc2 = sh. 60.
