Chapter 18: Oligopolies and Game Theory

Canadas Competition Bureau

________ helps ensure that monopolies do not get too large and cartels are not created.

Coooperation

________ causes production to be too low and prices too high, which creates dead weight loss.

Collusion

________: when businesses meet and agree on quantity to sell and prices.

Cartel

________: a group of businesses that are cooperating.

Oligopolists

________ do not raise production until price equals marginal cost.

Oligopoly

________: a market where a few sellers supply similar or identical products.

Nash equilibrium

________: occurs when people interacting with one another each chooses the best action given the actions the other people have chosen.

individual oligopolies

In general, ________ will raise production until the two effects equal each other.

output effect

The ________: selling one more unit increases profit since the price is above the marginal cost.

Remeber the competitive outcome

________ is the optimal outcome for society because thae where surplus is maximized.

Game theory

________: the study of strategic decision- making while keeping in mind how others will react to the decision.

oligopoly

a market where a few sellers supply similar or identical products

Game theory

the study of strategic decision-making while keeping in mind how others will react to the decision

Duopoly

oligopoly with only two sellers

collusion

when businesses meet and agree on quantity to sell and prices

Cartel

a group of businesses that are cooperating

Nash equilibrium

occurs when people interacting with one another each chooses the best action given the actions the other people have chosen

the output effect

selling one more unit increases profit since the price is above the marginal cost

the price effect

selling one more unit increases the market quantity supplied, which will reduce the price of cell phone plans and reduce the profits on all of the other phone plans that were sold

dominant strategy

a strategy that is best for a person to choose regardless of the strategies chosen by other people they are interacting with

Game theory

________ is not that useful for the other three business structures.

Telus Bell

________ demonstrates the tension between cooperation and self- interest.

alex

The prisoners dilemma is a fictional story of two prisoners, well call them ________ and Piper.

examples of oligopolies

using AirCanada or Westjet / Rogers, Bell, or Telus