Microeconomics

Leeds, von Allmen and Schiming

Chapter 12, Oligopoly

1. Oligopoly Assumptions

   1. Entry Barriers

   2. Product Differentiation

   3. Small number of interdependent firms

2. Collusion

   1. Tacit

   2. Explicit

3. Non-cooperative oligopoly

   1. Adjusting quantity and Cournot duopoly

   2. Rivalry

      1. Price competition

         1. Bertrand duopoly: low price gets all

         2. Kinked demand curve

      2. Advertising

         1. Beer

         2. Autos

   3. Product differentiation/proliferation

      1. Running shoes

      2. Ready to eat cereal

4. Cooperative oligopoly

   1. Industry standards

   2. Network externalities

   3. Cartels

      1. Price fixing

      2. Market sharing

5. Modeling strategic interaction: Game Theory

   1. Assumptions

      1. Players are rational

      2. List of players

      3. List of strategies

      4. List of payoffs

   2. Game solutions and equilibria

      1. Dominant strategy

         1. Prisoner's Dilemma

      2. Eliminating dominated strategies

      3. Best response

      4. Nash equilibrium