Chapter+16+Oligopoly+(Joon,+Scott,+and+Steven)

Key Terms:
 * Oligopoly:** a market that is designed in which only few producers offer similiar/identical products("monopoly" of many firms)
 * monopolistic competition:** a market in which many firms sell products that similiar but NOT identical.
 * Nash equilibrium**: a situation in which people in the economy interact with each other to choose their best strategy given the strategies are all the others have chosen.
 * game theory**: the study of people's behaviors in strategic situations.
 * prisoners' dilemma**: a particular situation between two captured prisoners tha show why cooperation is hard to maintain even when it benefits both sides.
 * dominant strategy**: a strategy that is best for a player in a game no matter what the strategies chosen by the other players are.

-**Oligopoly** is an imperfect competitive market. -It is a market with only a few sellers. -Each sell products identical to one another. -**Monopolistic competition** is also an imperfect competitive market. -Each sell similar but not identical goods.
 * Between Monopoly and Perfect Competition**

-An oligopoly with two participants is called a duopoly. -A **collusion** is when the members of an oligopoly agrees over the production and the price of a good. -And the members of an oligopoly acting as one is called a **cartel.** -Although these kind of unisons are highly desireable, antitrust laws have prohibited these kind of cooperation most of the times. -As a result, a **Nash equilibrium** will occur when a each choose their best strategy.
 * Markets With Only a Few Sellers**

-Because oligopolies are small, each firm should have its own strategy. -It is difficult to cooperate to maintain its efficiency because of something called the **prisoners' dilemma. -**Even though firms negotiate and agree, it may be broken because there are situations where firms will win either way.
 * Game Theory and the Economics of Cooperation**

-Oligopolies maximize profit by forming cartels and acting like monopolists. -Prisoners' dilemma makes it almost impossible for people to cooperate with each other even though it is for the better. -Policymakers have anti trust laws to make oligopolies difficult to form.
 * Conclusion**

1. What is the difference between a monopolistic competition and an oligopoly? 2. Why are oligopolies hard to maintain? 3. What does it mean to have similar products but not identical?
 * Study Questions**

Student Produced Resource: [|Quizlet Chapter 16]