When the different firms in an industry make products that are noticeably different. (some market power)
The 4 categories that Economists use to classify industries
Monopolistic Competition (imperfect competition)
Oligopoly (imperfect competition)
Any of several practices by which firms try to compete with each other, which do not rely on choosing lower prices. Advertising, contests, giveaways and special services. (buyers' perception of product differences)
When firms cooperate with each other and have the ability to charge higher prices but is illegal in U.S.
The study of how people and organizations interact with each other in strategic situations. A game-theoretic analysis involves identifying the "players" in the game and the rules. Then, the analysis will specify the payoffs that accompany various outcomes. On the basis of the rules and the payoffs, each player will develop a set of strategies that determine how they will play.
The amount lost by some players is exactly equal to the amount won by other players in a game.
A game when the sum of gains and losses can be positive or negative (opposite of ZSG)
An attempt to allow the cartel members to collude on prices, ny reducing the number of prices that must be agreed upon.
Theory used to describe oligopolies in which it is easy to enter. If entry is relatively easy, then a market may be contestable, even if it has only a small number of firms.
monopolistically competitive industries and oligopolies
many firms (small relative to market)
easy entry and exit
product differentiation (some market power)
advertising and other non-price competition
small number of firms
barriers to entry
strategic interdependence among firms
price maker (good amount of market power)
may or may not have non-price competition
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