Untitled Flashcards Set

cartel

A group of firms acting together to limit output, raise prices, and increase economic profit.

duopoly

A market with only two firms.

game theory

The tool that economists use to analyze strategic behavior (behavior that recognizes mutual interdependence).

prisoners' dilemma

A game between two prisoners that shows why it is hard to cooperate, even when it would be beneficial.

Nash equilibrium

An equilibrium in which each player takes the best possible action given the action of the other player.

payoff matrix

A table that shows the payoffs for each player for every possible combination of actions by the players.

strategies

All the possible actions of each player in a game.

antitrust law

A body of law that regulates oligopolies and prohibits them from becoming monopolies or behaving like monopolies.

resale price maintenance

An agreement between a manufacturer and a distributor on the price at which a product will be sold.

predatory pricing

Setting a low price to drive competitors out of business with the intention of setting a monopoly price when they are gone.

tying arrangement

An agreement to sell one product only if the buyer agrees to buy another, different product.