9781118041581

Oligopoly 357 Newspapers are a dramatic case in point. Based on CR 4 , the newspaper industry would seem to be effectively compe ...

Concentration and Prices Concentration is an important factor affecting pricing and profitability within markets. Other things b ...

Oligopoly 359 prices for consumer goods and materials (and a smaller positive effect for cap- ital and producer goods).^4 Is an ...

below what they would have been absent deregulation.^6 Since 1988, average airfares have continued to decline (after adjusting f ...

Quantity Competition 361 innovation, marketing, and advertising) encompassed by oligopoly. In this sec- tion, we examine quantit ...

FIGURE 9.2 Optimal Output for a Dominant Firm The dominant firm’s net demand curve is the difference between industry demand and ...

Quantity Competition 363 firm is to anticipate the supply response of the competitive fringe of firms. For instance, suppose the ...

in parentheses in Equation 9.1, depends on the competitor’s output quantity. Increases in Q 2 cause a parallel downward shift in ...

Quantity Competition 365 The duopoly equilibrium lies between the pure-monopoly and purely com- petitive outcomes. The latter ou ...

and approaches 24 thousand as the number of firms becomes large (say, 19 or more). In turn, the equilibrium market price approac ...

Price Competition 367 FIGURE 9.3 Optimal Output with Kinked Demand If the demand curve is kinked, the firm’s marginal revenue cu ...

cost could decrease without changing the firm’s optimal price. (Small shifts in demand that retain the kink at P* would also lea ...

Price Competition 369 TABLE 9.2 A Price War Each firm’s optimal strategy is to set a low price. Firm 2 High Price Low Price High ...

strategies is driving them to low prices and low profits. One might ask, Why can’t the firms achieve the beneficial, high-price ...

Price Competition 371 the suspects will be charged and convicted of a serious crime that carries a five-year sentence. Without c ...

Georges Bank in the North Atlantic. Each country’s fleet seeks to secure the greatest possible catch. But the simultaneous pursu ...

Price Competition 373 In their own inimitable way, Harding and Gillooly entangled themselves in a classic prisoner’s dilemma: wh ...

should be emphasized that this result depends on two extreme assumptions— that (1) all competition is on the basis of price and ...

Price Competition 375 Strategic Price Cuts. Increased competition from competitors—whether in the form of advertising, quality i ...

OTHER DIMENSIONS OF COMPETITION Thus far, our focus has been on quantity and price competition within oligop- olies. In this fin ...