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The market structure in which natural or legal barriers prevent the entry of new firms and a small number of firms compete is
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oligopoly
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If one firm controls 96% of total sales in market they are
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an oligopoly
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What is an example of and oligopoly
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the automobile industry, the battery industry
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What is a characteristic of an oligopolistic market
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firms are large relative to the size of the market, firms have to consider the behaviour of their rivals since their rivals are also large relative to the size of the market as a whole
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Why might only a few firms dominate an oligopolistic industry
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natural or legal barrier to entry exists
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Characteristics of oligopoly
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- faces downward sloping demand curve
- profit-maximizers
- more than one firm in the industry
- set prices
- profit-maximizers
- more than one firm in the industry
- set prices
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If the efficient scale of production only allows three firms to supply a market, the market is
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a natural oligopoly
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A cartel is a group of firms which agree to
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raise the price of their products
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Because an oligopoly has a small number of firms
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the firms are interdependent
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All games share four common features. They are
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rules, strategies, payoffs and outcome
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Prisoners' dilemma describes a case where
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rivalry of the participants leads to the worst solution from their point of view
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In the prisoners' dilemma with players Art and Bob, each prisoner would be best off if
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both prisoners deny
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In the prisoner's dilemma, with players Art and Bob, the dominant strategy equilibrium is that
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both prisoners confess
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A dominant strategy equilibrium occurs when
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there is a clear strategy for each player independent of the other player's actions
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A Nash equilibrium occurs when
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each player takes the best possible action given the other player's action
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If there is a successful collusive agreement in a duopoly to maximize profit
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the price will be the monopoly price
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The firms Trick and Gear form a cartel to collude to maximize profit. If this game is nonrepeated, the Nash equilibrium is
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both firms cheat on the agreement
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