Chapter 19 Oligopoly Flashcards
1
Q
Define Nash Equilibrium
A
For an oligopoly market, each firm is making a profit-maximizing choice given the choices of its rivals
2
Q
What is the Bertrand model of oligopoly?
A
Firms produce homogenous products and set their prices simultaneously
3
Q
How is the Cournot model of oligopoly different than Bertrand’s?
A
The Cournot model focuses on the fact that firms choose how much to produce (their quantities) simultaneously as opposed to what price they are going to pay. The price clears the market given the total quantity produced. Equilibrium is ALWAYS above MC. Look at figure 19.4
