Chapter 11
Oligopoly
Oligopoly Competition
An oligopoly is a market structure characterized by large firms that dominate the market, offering similar or identical products. This concentration of ...
Type of Oligopoly: Collusive
A collusive oligopoly occurs when firms in an oligopolistic market—where only a few companies dominate—agree to work together instead of ...
Type of Oligopoly: Non-Collusive
A non-collusive oligopoly is a market structure where only a few firms dominate but compete against each other. In this setting, firms are independently ...
Oligopoly and its Unfair Practices
An oligopoly, where market power is concentrated among a few entities, can lead to unfair strategies that disrupt the competitive landscape and reduce ...
Public Policy under Oligopoly: Antitrust Laws
Public policy plays a crucial role in regulating the behavior of firms within oligopolistic markets to protect consumers and encourage fair competition. ...
Differentiating Types of Markets
Market structures are classified by distinct characteristics that influence how firms compete and set prices.
In the realm of perfect competition, ...
Bertrand Competition
In a Bertrand oligopoly, companies compete by strategically setting prices rather than engaging in a continuous price-cutting war. Each company ...
Nash Equilibrium of a Bertrand Oligopoly
A Bertrand oligopoly occurs when a few firms compete by strategically setting prices rather than lowering them indefinitely. In this model, firms sell ...
Cournot Competition
Firms indirectly determine price through output choices, rather than avoiding price-setting altogether. Each firm assumes its competitor’s production ...
Equilibrium in a Cournot Oligopoly
In the Cournot model, businesses compete based on the assumption that each firm chooses its production quantity by presuming its rivals’ output levels. ...
Stackelberg Competition
The Stackelberg model illustrates a type of oligopoly where a leading firm sets its production quantity, anticipating the reaction of follower firms, who ...
Stackelberg and First Mover Advantage
The Stackelberg model explains how being the first mover in a market gives a firm a competitive edge. The first-mover advantage is the benefit of ...
Differentiated Goods: Bertrand Competition
The Bertrand model with differentiated products explains how companies compete on both price and perceived value. The classic Bertrand model assumes ...
Equilibrium in a Differentiated-Products Bertrand Market
In the Bertrand model with differentiated products, firms compete on price while offering similar but not identical goods. Differentiation softens price ...
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