Oligopoly

Question 1

Oligopoly characteristics

Answer 1

-Market dominated by few firms
-entry barrier exist
-firms are MUTUALLY INDEPENDENT:they consider possible reactions of rivals

Question 2

Cartel

Answer 2

agreement between firms to formally collude on price and output

Question 3

how to calculate cheating in cartels

Answer 3

L=(supplied amountchange in price)/#firms
G=extra sold new price
net gain= G-L

Question 4

Game theory

Answer 4

how individuals make decisions to achieve their goals when otehr parties or factors can influence

Question 5

Nash equilibrium

Answer 5

in each players interest to maintain status quo –> optimal strategy

Question 6

tendency to cooperate much greater when:(5)

Answer 6

-small amount of firms
-similar products
-growing than contradicting market
-when there is a dominant firm
-nonprice rivalry is absent

Question 7

4 firm concentration ratio

Answer 7

high concentration ratio: low competitive
low concentration ratio: high competetive
(Value of sales of top 4 firms/value of market sales)*100

Question 8

HHI

Answer 8

take market share of firms in an industry, square, then sum
if >10000, then monopoly, if 0, then perfectly ompetetive