Oligopoly and Strategic Behavior

This set of flashcards covers key concepts related to oligopoly and strategic behavior, including definitions and explanations of important terms and models discussed in the lecture notes.

Oligopoly

A market structure in which a few large producers dominate the market.

Collusion

An agreement among firms in an oligopoly to set prices or output levels.

Kinked-Demand Curve

A model that describes a non-collusive oligopoly where firms match price decreases but ignore price increases.

Price Leadership Model

A situation in which one dominant firm sets prices that other firms in the market follow.

Game Theory

A mathematical approach to analyzing strategic interactions among decision-makers.

Mutual Interdependence

A situation in which the actions of one firm directly affect the actions of another firm in the market.

Herfindahl Index

A measure of market concentration used to assess the level of competition in an industry.

Dominant Firm

A firm that has a significant market share and can influence market prices.

Prisoner's Dilemma

A situation in which two individuals acting in their own self-interest do not produce the optimal outcome.

Entry Barriers

Obstacles that make it difficult for new firms to enter a market.