Oligopoly

Question 1

oligopoly

Answer 1

An oligopoly is an industry consisting of a few firms

Question 2

Quantity (Cournot) Competition

Answer 2

firms compete by choosing output levels

Question 3

To determine if such a cartel can be stable we need to know 3 things

Answer 3

i. What is each firm’s per period profit in the cartel?
ii. What is the profit a cheat earns in the first period in which it cheats?
iii. What is the profit the cheat earns in each period after it first cheats?

Question 4

Stackelberg games

Answer 4

a sequential game

If firm 1 chooses its output level first and then firm 2 responds to this choice?
Firm 1 is then a leader and firm 2 is a follower

Question 5

Price (Bertrand) Competition

Answer 5

firms compete using only price-setting strategies, instead of using only quantity-setting strategies
play simultaneously

Question 6

Price leadership game

Answer 6

a sequential game
one firm sets its price ahead of the others

one large firm (the leader) and many competitive small firms (the followers)