1) Base Case - Oligopoly is about business strategy
2) Bertrand S.P.S. - Strategic Price Setting
a) 3 Scenarios
A: split the marker
b) Strategy for firm 1
3) Cournot SQS - Strategic quantity setting
Firm 1: Intercept, depends on output
BRF, best response function
Equilibrium - "Stable" - Agreed on a stable outcome No changing mind initial offer slope at
b) Cournot triopoly
If Duopoly: As for each
Each firm looses 7, and the third earns 9. It is worth for the original to bribe the third not to enter! A monopoly would make 36. In duopoly it would be 16 so the monopoly can bribe the duopolist 16 dollars- CRTS causes this. If we had upward slopping ,there would be a built-in disadvantage to go large so we bribe.
c) Cournot N-opoly
Note: because some cost
3) Stackelberg - Leader/Follower (SQS)
Leader knows BRFf
Follower BRF2 Leader
Triopoly - Simultaneous or sequential
Do both follow one or third follows second and second follows first?
(Sequential-solve BRf3 sub into firm 2 demand to get BRf2 and sub both into leader demand)(If two don't have same C's,
4) Chamberlin-Monopolistic Competition
Product Differentiation - Advertising to get monopoly power. - demand for firm one when there is only one firm. As firms enter - market share gets smaller until an entry stops.
Long run :
Maximizing = 0
b) Predatory pricing
Drop but you can make so they wont enter.