Ch. 17

An oligopoly is a market with:
Few sellers
Similar products
Example of an imperfect competition
Simplest version is a duopoly with 2 firms and decide the quantity to sell.
They collude to form a cartel and act as a monopoly.
They don't collide for self interest:
Difficult to agree, self interest
Higher quantity, lower price and profit
Nash Equilibrium
Cheating=Pursuing own self interests.
Oligopolists form cartels and they collide over the production and price of goods.
Collusion is an agreement among firms in a market.
Firms act with self interest at a price that maximizes profit.
They use strategies like Nash Equilibrium.
Firms produce more than monopoly and less than competitive.
As number of sellers grow, the more the graph begins to look competitive.
The prisoners' dilemma shows why it is difficult for oligopolies to work.

Chapter 16

Monopolistically competitive markets are a combination of perfectly competitive and a monopoly.
Thus the firm's are:
Price takers due to competition.
Price makers because they sell slightly different products.
Monopolistically competitive markets are characterized by:
Lots of firms
Differentiated Products:
Advertisements
Brand Names
Free Entry
They produce on the downward sloping portion of ATC at a price above marginal cost.
They cause deadweight loss because price is above market cost.
Their goals are to promote brand loyalty that can be irrational at times.
These markets aren't easily government fixed like the other monopolies.

Chapter 15

This chapter is about monopolies.
It discusses how they are formed.
It discusses how they make profit.
It discusses their welfare cost.
A monopoly is a firm that is a sole seller of a product without close substitutes.
The firms become price makers.
The marginal revenue of monopoly firms arent a straight line because they hold market power.
Monopolies still produce where marginal revenue is equal to marginal cost.
Monopolies can be inefficient but are able to be regulated.