Transcription of Chapter 9 Market Structure: Oligopoly
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Chapter 9 Market Structure: Oligopoly
Economics for Managersby Paul FarnhamyChapter 9 Market Structure: 2005 Prentice Hall, Market structure characterized byA Market structure characterized by competition among a small number of large firms that have gmarket power, but that must take their rivals actions into idtihdliconsideration when developing their competitive 2005 Prentice Hall, Olilof an Oligopoly Firms have Market power derived from barriers to entryy However, a small number of firms compete with each othercompete with each other Each firm doesn t have to consider the actions of otherconsider the actions of other firms, thus, behavior is 2005 Prentice Hall, Olil M d lOligopoly ModelsAssumes that firms pursue profit-maximizing strategies based on ggassumptions about rivals behavior and the impact of this behavior on thifi t tithe given firm s strategies demand curve theory models3 Strategic entr 2005 Prentice Hall, entry deterrenceKinked Demand C MdlCurve Model Assumes that a firm is faced with two demand curves, assuming fthat other firms will not match price increases but will match price decreasesprice decreases If the firm cons
lower costs Attracts other ... It can raise market price without inducing significant competition from non-cartl btel members ... • Penalty for price discounts
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