Collusion And The Prisoner�S Dilemma In Oligopolistic Markets, Including A Two Player Pay Off Matrix
Economics notes
Collusion And The Prisoner�S Dilemma In Oligopolistic Markets, Including A Two Player Pay Off Matrix
➡️ Price competition is when firms compete with each other by offering lower prices for their goods and services. This type of competition can lead to lower prices for consumers, but can also lead to lower profits for firms.
➡️ Non-price competition is when firms compete with each other by offering better quality products, better customer service, or more innovative products. This type of competition can lead to higher profits for firms, but can also lead to higher prices for consumers.
➡️ Both price and non-price competition are important for a healthy market economy. Price competition helps to keep prices low, while non-price competition helps to ensure that firms are providing quality products and services.
What is collusion and how does it affect oligopolistic markets?
Collusion is an agreement between two or more firms in an oligopolistic market to act together in order to increase their collective profits. This can be done by setting prices, limiting production, or dividing up the market. Collusion can lead to higher prices and reduced competition, which can be beneficial to the firms involved but can be detrimental to consumers.
What is the Prisoner�s Dilemma and how does it relate to oligopolistic markets?
The Prisoner�s Dilemma is a game theory concept that describes a situation in which two players have conflicting interests. In the context of oligopolistic markets, the Prisoner�s Dilemma can be used to illustrate the incentives for firms to collude. The two players in the game are the firms, and the pay off matrix shows the different outcomes depending on whether they cooperate or not.
What is a two player pay off matrix and how is it used to analyze oligopolistic markets?
A two player pay off matrix is a tool used to analyze the outcomes of a game between two players. In the context of oligopolistic markets, the two players are the firms and the pay off matrix shows the different outcomes depending on whether they cooperate or not. The pay off matrix can be used to analyze the incentives for firms to collude and the potential consequences of such behavior.