ECON 201 Ch 17

The study of how people behave in strategic situations.

not necessary for understanding competitive or monopoly markets.

each oligopolist cares only about its own profit.

each duopolist wants a larger share of the market in order to capture more profit.

the quantity of output approaches the socially efficient quantity. the price approaches marginal cost. the price effect is diminished.

A situation in which firms choose their best strategy given the strategies chosen by the other firms in the market

exceeds the monopoly level of output, but falls short of the competitive level of output.

behaves as a monopolist.

consider how competing firms might respond to its actions.

each prisoner to confess. to a breakdown of any agreement that the prisoners might have made before being questioned. to an outcome that is not particularly good for either prisoner.

both prisoners confess

undesirable, because it leads to output levels that are too low and prices that are too high.

protect the competitiveness of U.S. markets.

even talking about fixing prices.

individuals can sue to recover damages from illegal cooperative agreements.

a monopoly firm reducing its price in an attempt to maintain its monopoly.