Chapter 12 points out that, alone among industry structures, oligopoly (few sellers) forces strategic reasoning on member firms. This chapter explores some of the implications of this aspect of oligopoly and some of the models that have been used to gain insights into the behavior of oligopolists. In doing so, it deals tangentially with elements of game theory.
KeywordsNash Equilibrium Marginal Cost Demand Curve Marginal Revenue Member Firm
- 1.Hallam A (2004) Noncooperative oligopoly models. Online course notes at http://www2.econ.iastate.edu/classes/econ501/hallam/documents/Oligopoply.pdf
- 2.Martin S (2000) The theory of contestable markets. At www.krannert.purdue.edu/faculty/smartin/aie2/contestbk.pdf
- The table in the preface lists chapters in microeconomics textbooks that relate to this chapter. The following can also be of value:Google Scholar
- Gibbons R (1992) Game theory for applied economists. Princeton University Press, Princeton. A general treatment of game theory is beyond the scope of this chapter. This book provides a good overview of game theory as it applies to economic decisions.Google Scholar
- Anderson ET, Dana JD (2009) When is price discrimination profitable? Manage Sci 55:980–989. The paper develops a framework for analyzing many important types of price discrimination: intertemporal price discrimination, damaged goods, advance purchase discounts, coupons(rebates), and information goods (list taken from the paper).Google Scholar
- McAfee RP (2007) Pricing damaged goods. Economics Discussion Papers, No. 2007-2, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2007-2. This paper shows how firms can segment markets by impairing some units its product and selling them at a reduced price. It presents numerous examples. A paper by Deneckere and McAfee (1996), cited in this paper, contains additional examples.