# Questions tagged [oligopoly]

Questions about markets where the number of sellers is finite and larger than one.

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### Stackelberg model with 3 symmetric firms

Firm 1, the incumbent, sets quantity q1 first, then firm 2 enters the market and sets quantity q2, knowing q1. Lastly, firm 2 enters the market and sets quantity q3, knowing q1 and q2. Firms are ...
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### Long Run Model of Oligopolies After Recession

I am currently investigating about the long run impact of the COVID 19 to the US airline industry. Is there any specific (long-run) model that I can use for oligopolies (for 4 main companies)? Because ...
1 vote
111 views

### Underlying assumptions of Bertrand competition

Q1. Under the lists of assumptions for Bertrand model it is mentioned in last that the following are intuitively deducible when considering the law of demand of firms' competition in the market: If ...
1 vote
110 views

### For which number of firms in a Cournot oligopily a merger is profitable

Assume a Cournot oligopoly with N (equal to 2 or higher) symmetric firms. Firms face a demand function P=a-bQ and an average cost c. I need to find the number of firms N for which it will be ...
1 vote
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### On Cournot question

In a duopoly market, the market demand function is $y(p) = 120-p$ where $y=y_1+y_2$ Total function of firm 1 is $C_1(y_1)=20y_1$ while the reaction function of firm 2 is $y_2= 60-0.5y_1$. Assume that ...
58 views

### How do the assumptions $p'+q_ip''<0$ and $p'-c''<0$ ensure the stability of the Nash equilibrium among private firms in basic mixed oligopoly model?

I have two quick question regarding basic oligopoly models: What is meant by we impose the assumptions to $p'+q_ip''<0$ and $p'-c''<0$ to ensure the stability of the Nash equilibrium among ...
1 vote
256 views

### 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 ...
396 views

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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 ...
519 views

### 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 ...
551 views

### 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 $q_i=70 - 0.25q_j$ ...
1 vote
556 views

### 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 ...
1 vote
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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 ...
617 views

### 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 ...
6k views

### 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 ...
21k views

### 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 $i$'...
1k views

### 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 ...
1 vote
106 views

### 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 ...
529 views

### 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. ...
1 vote
729 views

### 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 ...
3k views

### 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 ...
822 views

### 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 ...
457 views

### 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 ...
1 vote
354 views

### 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 ...
153 views

### 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 ...
1 vote
15k views

### 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 ...
64 views

### 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 ...
64 views

### 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 ...
129 views

### 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 ...
2k views

### 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, ...
2k views

### 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 ...
76 views

### 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. ...
495 views

### 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 ...
167 views

### 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 ...