8. Oligopoly

Question 1

Oligopoly

Answer 1

Oligopoly is a market structure that features a small number of firms.

Question 2

Game Theory

Answer 2

The actions of one firm has direct effects on the other firms/ in making its own decision, a firm tries to anticipate what the other firms are about to do.

Question 3

Dominant Strategy

Answer 3

A strategy that is preferred by a player irrespective of the strategy selected by the other player.

Question 4

Simultaneous Game

Answer 4

A type of game in which players move simultaneously or alternatively they are unaware of the other players’ actions.

Question 5

Cartels

Answer 5

Cartels represent private agreements aimed at increasing the profit of the cartel members by reducing competition in the market. (controlling prices or preventing entry)

Question 6

Coordination Games

Answer 6

Coordination Games are a type of games that capture those situations where the players benefit from coordinating their decisions.

Question 7

Battle of the sexes

Answer 7

Battle of the Sexes is a game in which players differ over which activity they would prefer to engage in, but they still prefer engaging in the same activity over going alone.

Question 8

Strategy Profile

Answer 8

A strategy profile denotes a set of strategies, one for each player.

Question 9

Nash Equilibrium

Answer 9

• Each party has picked a choice given the choices of the other party, when both confess, but it’s not an optimal choice.
• No person has an incentive to change their behaviour or strategy unless someone else changes their behaviour or strategy.

Question 10

Pareto Dominance

Answer 10

The optimal strategy.