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in oligopoly, how many firms have dominance?
small amount of firms
examples of oligopoly
soft drink, airlines, cell phone companies
in an oligopoly, firms are
highly interdependent and affected by each other's actions
firms commonly ____ in an oligopoly
collude
there are high
barriers to entry for an oligopoly
game theory
study of how people and firms act strategically
dominant strategy in game theory
best choice regardless of what the other chooses
graph of game theory
2x2 square, everything on the left (in squares and table) corresponds to firm on left, everything else corresponds to the right
nash equilibrium
when both sides voluntarily choose a square and have no incentive to move
prisoner's dilemna
nash equilibrium results in worse than optimal result for both firms
how to show subsidy on payoff matrix?
add subsidy to result when one firm or both firms perform action that triggers subsidy (example: if only A chooses west, only add subsidy to A, if both choose west then add to both's payoff)
