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Agreements to restrain output among formerly competing firms to maximize profits.
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Collusion
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In Cournot duopoly, a schedule of optimal output levels given the output decision of a competing firm.
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Reaction Function
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A strategy that results in the highest payoff no matter what the other party chooses as a strategy.
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Dominant Strategy
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With N identical firms, a formula that states how price elasticity of demand for the firm is related to price elasticity of demand for the industry.
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EF=NEM
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A choice of strategy is made after observing the strategy of the other party to a game.
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Sequential Move
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Profit maximizing output adjustments are made among competitors assuming that the other firms will keep their outputs constant.
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Cournot Oligopoly
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In duopoly, all combinations of output levels of two firms that yield a constant level of profit for one of those firms.
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Isoprofit Curve
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Industry leader sets price and output decision independent of weaker competitors, leaving the remainder to be divided among these weaker competitors.
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Stackleberg Oligopoly
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Competition on price yielding a P=MC result even in situations of only a few competitors.
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Bertrand Oligopoly
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A combination of strategic choices among players from which there is no incentive to change by either party.
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Nash Equilibrium
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Incumbent firms have no market power over consumers in the absence of sunk costs.
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Contestable Markets
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Competitors ignore price increases but match price decreases, yielding a kinked demand curve and price stickiness.
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Sweezy Oligopoly
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A characteristic feature of oligopolistic industries wherein the price output decisions of one firm impact other firms in the industry.
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Interdependence
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Representation of a game involving players, strategies, and outcomes.
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Normal Form Game
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Players choose strategies simultaneously with no repetition of the game.
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One-Shot Game
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A strategy played over time contingent on the other party continuing with their strategic choice.
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Trigger Strategy
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