寡头垄断与粘性价格讲述.ppt

Oligopoly Chapter 16-2 Models of Oligopoly Behavior No single general model of oligopoly behavior exists. Oligopoly An oligopoly is a market structure characterized by: Few firms Either standardized or differentiated products Difficult entry Interdependence A key characteristic of oligopolies is that each firm can affect the market, making each firm’s choices dependent on the choices of the other firms. They are interdependent. Characteristics Oligopoly Oligopolies are made up of a small number of mutually interdependent firms. Each firm must take into account the expected reaction of other firms. Interdependence The importance of interdependence is that it leads to strategic behavior. Strategic behavior is the behavior that occurs when what is best for A depends upon what B does, and what is best for B depends upon what A does. Oligopolistic behavior includes both ruthless competition and cooperation. Game Theory Strategic behavior has been analyzed using the mathematical techniques of game theory. Game theory provides a description of oligopolistic behavior as a series of strategic moves and countermoves. Why Are Prices Sticky? When there is a kink in the demand curve, there has to be a gap in the marginal revenue curve. The Kinked Demand Curve The Kinked Demand Curve Game Theory and Strategic Decision Making The prisoner’s dilemma is a well-known game that demonstrates the difficulty of cooperative behavior in certain circumstances. Game Theory and Strategic Decision Making In the prisoner’s dilemma, where mutual trust gets each one out of the dilemma, confessing is the rational choice. Prisoner’s Dilemma and a Duopoly Example The prisoners dilemma has its simplest application when the oligopoly consists of only two firms—a duopoly. Prisoner’s Dilemma and a Duopoly Example By analyzing the strategies of both firms under all situations, all possibilities are placed in a payoff matrix. Firm and Industry Duopoly Cooperative Equilibrium Firm and Industry Du