曼昆微观经济学chapter16.ppt

16 Oligopoly Learning Objectives See what market structures lie between monopoly and competition Examine what outcomes are possible when a market is an oligopoly Learn about the prisoner’s dilemma and how it applies to oligopoly and other issues Consider how competition laws try to foster competition in oligopolistic markets BETWEEN MONOPOLY AND PERFECT COMPETITION Imperfect competition refers to those market structures that fall between perfect competition and pure monopoly. includes industries in which firms have competitors but do not face so much competition that they are price takers. BETWEEN MONOPOLY AND PERFECT COMPETITION Types of Imperfectly Competitive Markets Oligopoly Only a few sellers, each offering a similar or identical product to the others. Monopolistic Competition Many firms selling products that are similar but not identical. Figure 1 The Four Types of Market Structure MARKETS WITH ONLY A FEW SELLERS Characteristics of an Oligopoly Market Few sellers offering similar or identical products Interdependent firms Best off cooperating and acting like a monopolist by producing a small quantity of output and charging a price above marginal cost Because of the few sellers, the key feature of oligopoly is the tension between cooperation and self-interest. A Duopoly Example A duopoly is an oligopoly with only two members. It is the simplest type of oligopoly. Table 1 The Demand Schedule for Water A Duopoly Example Price and Quantity Supplied The price of water in a perfectly competitive market would be driven to where the marginal cost is zero: P = MC = $0 Q = 120 gallons The price and quantity in a monopoly market would be where total profit is maximized: P = $60 Q = 60 gallons A Duopoly Example Price and Quantity Supplied The socially efficient quantity of water is 120 gallons, but a monopolist would produce only 60 gallons of water. So what outcome then could be expected from duopolists? Competition, Monopolies, and Cartels The duopolists may a