Questions tagged [oligopoly]
Questions about markets where the number of sellers is finite and larger than one.
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Why can bilateral negotiations reduce an upstream firms market power in the presence of downstream cournot competition?
In the article Market failures and public policy (2015), Tirole claims that when bilateral negotiations between the upstream supplier and individual downstream firms take place, downstream competition ...
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how does monopolisitic competition make profit in the long run in reality
guys, I have this doubt that if the fast food industry such as KFC, and Maccas are examples of monopolistic competition how are they still making a profit? Because as per the model in long run the ...
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Cournot Duopoly firms guaranteed to produce the same amount
If a market is given to be a Cuornot duopoly and Q = q1 + q2. What assumptions can you make about q1 and q2 being equal? Is it possible for q1 > q2 and thus for company 1 to have greater market ...
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Math behind the first mover advantage in Stackelberg model
Suppose the market demand is $P(Q) = a-bQ$ and the manufacturing cost of an item is $c_1q_1$ for firm $1$ and $c_2q_2$ for firm $2$.
In the Cournot model, we maximize the profit functions and plug in ...
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Why is the Cournot equilibrium price more than competitive price?
Why is the Cournot competition price more than the perfectly competitive price?
My intuition tells me that since the quantity is less than what would've been the case in a perfect competition, so the ...
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Doesn't it make sense in terms of economic security for tech companies to support unions?
It seems to me looking across (modern) history that the biggest threat to monopoly is government intervention. It certainly seems true in present times when you have many politicians on the left ...
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How useful are basic economics (elasticity / consumer & producer theory) in real life?
I am thinking how these concepts will be applied in the industries / at a job.
For example I could see elasticity as useful in projecting the outcomes of supply ...
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Realistic examples of quantity competition
In microeconomic models of oligopolies we consider price competition and quantity competition (think Cournot, Bertrand, Stackelberg). I can easily imagine price competition where a producer sets the ...
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Why would a company sabotage its product's ability to be used for a particular purpose?
I saw in the news recently that NVIDIA has placed limits on the hash rate for mining Ethereum cryptocurrency. This is purportedly to get more GPUs into the hands of gamers instead of crypto miners.
...
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Profit maximization of an oligopolistic firm
I have some serious doubts between A and B.
On one hand, given that each oligopolistic firm follows the same profit maximization rule as that of a monopolistic one, it's the basic rule of MR = MC, and ...
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Will there always be excess profit in the Cournot model equilibrium/monopoly
So I'm studying market structures for the end of term, and I'm a bit confused about excess profits.
From what I can see, excess profits occur when the demand curve intersects the AC curve - the MR=MC ...
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Sequential and simultaneous price competition
Frims 1 (leader) and 2 (follower) compete in price with product differentiation
• Find the equilibrium price, quantity and profit when they choose price simultaneously and sequentially.
q1=100-10p1+...
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Uniform price vs. pay-as-bid auctions in energy markets
These two types of auctions are most commonly used in the energy trading markets. What would be advantages and disadvantages of each? And in the end, can we expect them to deliver similar outcome?
One,...
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Equilibrium with substitute goods
I am attempting to solve the following problem
The demand functions for two substitute goods, the production cost of which equals $c_1$ and $c_2$,
are $q_1 = a_1 + b_{11}p_1 + b_{12}p_2$ and $q_2 = ...
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Why wouldn't other firms follow suit if an individual firm decides to cut its price?
Why doesn't the demand curve an individual firm faces in a perfectly competitive market have the same elasticity as it does in a oligopolistic market?
Under perfect competition, if a firm increases ...
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Cournot oligopoly - first-order condition
I am reading an article that has this description of the first-order condition for a Cournot n-firm game:
Take $P(Q) = Q^{-1}$, $\pi_i(q_i, Q) = (Q^{-1} - c_i)q_i$.
Then the first-order condition for ...
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Duopoly vs Collusion (quadratic costs)
Suppose there are 2 firms; Demand curve is given by $P=1400 - 5(q_1+q_2)$ and cost function is given by $C_i = 5q_i^2$.
For cournot, the best response function comes out to be $q_i=70 - 0.25q_j$ ...
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Perfect Bayesian Equilibrium in a two stage game with incomplete information
I would like to solve a game where firms have private information about their own type, but only know the distribution of the other firm's type. They interact in two stages, where the strategies ...
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Is there any research, theory, or anything which shows how much of a market has to be in power of a few companies to be a force against free market?
According to Free market
a free market is a system in which the prices for goods and services
are determined by the open market and by consumers. In a free market,
the laws and forces of supply ...
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Stackelberg Oligopoly 3 firms [closed]
Imagine that there are 3 firms in a monopolistic market, F1, F2 and F3. Firms 1 and 2 are incumbent firms and act simultaneously whereas Firm 3 observes the actions of both firms before deciding ...
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Stackelberg with 3 firms
I'm currently trying to solve the following problem:
Stackelberg with 3 firms Imagine there are three firms on a monopolistically competitive
market. The marginal cost of produc- tion in each ...
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How do small firms survive in an oligopoly?
How do small firms survive in an oligopoly if large firms already dominate a huge amount of market share in the market? in terms of the supermarket industry between large supermarkets and small ...
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Supermarkets industry market structure
If the industry is dominated by a few major large retailers like Walmart and target with thousands of many other small supermarkets around the country, what is the market structure of the industry? is ...
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Non Collusive Cournot Duopoly model with two firms, zero costs and linear demand curve
I am reading Modern Microeconomics by Koutsoyiannis. In a Non Collusive Cournot Duopoly model with two firms, zero costs and linear demand curve.
Firm A produces half the total market demand to ...
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Will the market for driverless cars move toward a monopoly?
There is a short article in The Economist (link below) where the writer makes the claim that because there are firms the exhibit economies of scale - in driverless technology - they will eventually ...
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3 Firm Stackelberg's Oligopoly Game
Consider a market in which there are three firms, all producing the same good. Firm i's cost of producing qi units of the good is Ci(qi)=0 for qi≥0 for each i∈{1,2,3}; the price at which output is ...
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Finding the demand function [closed]
Here is the problem:
Suppose that an oligopolist charges a price of 500 and sells 200 units of output per day. If the oligopolist increases its price about 500, quantity demanded will decline by 4 ...
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Question on oligopoly.
Consider an oligopoly between two identical firms producing a homogenous good with constant marginal cost where firms face linear market demand. $B_i(q_j)$ denotes firm i’s best response given the ...
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Intuition behind a cournot duopoly nash equilibrium producing a higher output than a monopoly?
I am just wondering if someone could explain the descriptive, not mathematical intuition behind why a cournot equilibrium for a duopoly produces a higher level of output than a monopolist but lower ...
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How exactly is a Bertrand equilibrium defined?
By 'given the price set by other firm' does this mean the firm knows its competitor's exact output? I had read 3 textbooks, but one describes that they have a precise expectation of what their ...
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Game Theory of Two Firms
There are only two firms that produce and sell hockey equipment, Abel Corporation (A) and Baker Company (B). They each sponsor special events to try to gain customers. As there are only 2 firms, the ...
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Firm Concentration and Low Inflation
Inflation in the advanced economies since the financial crisis has been surprisingly low. Yet at the same time we’re told that the US economy is losing its dynamism in recent decades. This is ...
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How does market work when there are few buyers and few sellers at the same market?
If I understand it right, correct term for such situation is bilateral oligopoly.
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Is the global Automobile Industry changing from an oligopoly to monopolistic competition?
The current situation is the automobile industry is an oligopoly as there are few big firms and massive barriers to entry due to cost.
However, The industry seems like it is changing to a monopolist ...
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Studying Oligopolies
I am a very Macro guy, but I need to dive a little in the world of Microeconomics. Specifically, I need to study oligopolies. From the general theory to empirics. Since I do not know the literature, I ...
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Oligopoly kinked demand graph doesn't make a sense to me
Hello, so in class I learned about the kinked demand curve in oligopoly. Our teacher said that under the sticky price, the demand is inelastic. However, I don't understand how the demand can be ...
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Are market structures on a spectrum?
So I understand that each market structure has their own characteristics, and that for instance Perfect Competition involves high competition, and I believe Monopolistic competition slightly less so, ...
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Price when both supply and demand have market power
I have an intermediate sector that operates using labor only. There is 1-1 pairs between firms and workers, with profits
$$\pi = (Ap - w)\cdot 1$$
$p$ is the price, $A$ productivity, $w$ wage. ...
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Cournot game with 2 firms
I have given
2 firms in a market with constant marginal costs and no fixed costs
market demand has $D(p)$
The firms play a Cournot game
I'm supposed to Calculate the equilibrium quantity for each ...
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Choosing the nondominant strategy in a duopoly
Would a company ever choose a nondominant strategy in a duopoly?
Let's take this specific example (2007 AP MicroEcon B #2). Two airlines, Airtouch and Windward, are scheduling flights for either ...
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In which market structure does the consumer has almost zero knowledge about the good?
Consider goods that are almost identical (e.g. cement) and require technical knowledge to understand their merit, which an ordinary consumer might not possess. What then is the feature characteristic ...
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When a demand function is split, how do we algebraically change function
For example, in tacit collusion for a Bertrand situation, demand would be split between the two colluding firms. How would the reflect upon the demand function?
For example D = 100 - 2Q, and for ...
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Nash equilibrium of a Bertrand game with different marginal costs
Consider the following game of Bertrand (price competition):
There are two players, $1$ and $2$. Each has a publicly known marginal cost, $c_i$.
A strategy is a price, $p_i\in\mathbb{R}$.
Player $i$'...
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Dynamic Bertrand competition when players take turns
Consider the following game:
There are two players, $i\in\{1,2\}$
Time is discrete and runs to infinity during periods $t=\{1,2,\ldots\}$
At eat point in time, players have a price $p_i(t)\in\mathbb{...
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Mixed Cournot/Bertrand Duopoly [closed]
I am learning basic Oligopoly models.
I know that :
In Cournot model firms set output - output is the strategic variable.
In Bertrand model firms set prices - price is the strategic variable.
...
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Clarification about Market Structure Oligopoly or Monopoly
As per the definition i found in the internet,
Oligopoly, in which a market is run by a small number of firms that together control the majority of the market share.
Monopoly, where there is only ...
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Adjustment to equilibrium in Cournot model with 2 firms
In pg. 509, of Hal Varian's Intermediate Microeconomics Ch. 27, writer discusses the Cournot equilibrium.
In the figure, the reaction curve of firm 1 f1(y2) was steeper than firm 2 f2(y1).
When we ...
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A market correction for an industry which has had long-run negative externalities
Take a market where there have been long-run negative externalities. That is to say, the negative externalities have been in place long enough to have played a part in the investment decisions for all ...
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