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Imperfect Competition
a market where multiple firms with at least one firm being a price setter
ex: Samsung and Apple dominating the smartphone market. Each sells phone but with unique features.
Oligopoly
big company firms dominating the market. these companies have power over influence and prices
ex: wireless carriers, airlines, music
Duopoly
an industry that only has two firms
ex: coco cola and pepsi soft drinks
Overt Collusion
firms openly agreeing working together on an agreement for a fixed price.
not good cuz this will create higher prices.
Tacit Collusion
an unwritten and unspoken understanding between companies to reduce competition
Strategic Choice
the choices you make regarding your strategy
Game Theory
how people or businesses make decisions based on what they observed.
ex: having a cookie or lemonade stand?
Dominant Strategy
using what you have to your advantage
ex: choosing to share or to keep your toys
Tit-for-tat Strategy
a situation where a firm responds to cheating by cheating and cooperation by cooperation
“eye for an eye”
Trigger Strategy
a firm will make it clear that they will respond aggressively if they are being forced to.
Price Discrimination
a situation where a company charges different prices for the same product to different people
ex: tourist discount, local discount
