9.6 KEY TERMS

image | interactive activity

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

Question

Oligopoly
Oligopolist
Imperfect competition
Duopoly
Duopolist
Collusion
Cartel
Noncooperative behavior
Antitrust policy
Tacit collusion
Price war
Interdependence
Game theory
Payoff
Payoff matrix
Prisoners’ dilemma
Dominant strategy
Nash equilibrium
Noncooperative equilibrium
Strategic behavior
Tit for tat
Monopolistic competition
Product differentiation
an oligopoly consisting of only two firms.
a player’s best action regardless of the action taken by the other player.
efforts undertaken by the government to prevent oligopolistic industries from becoming or behaving like monopolies.
a collapse of prices when tacit collusion breaks down.
involves playing cooperatively at first, then doing whatever the other player did in the previous period.
a market structure in which no firm is a monopolist, but producers nonetheless have market power they can use to affect market prices.
the reward received by a player in a game, such as the profit earned by an oligopolist.
an industry with only a small number of producers.
a market structure in which there are many competing producers in an industry, each producer sells a differentiated product, and there is free entry and exit into and from the industry in the long run.
actions by firms that ignore the effects of those actions on the profits of other firms.
the attempt by a firm to convince buyers that its product is different from the products of other firms in the industry.
(also known as a noncooperative equilibrium) when each player in a game chooses the action that maximizes his or her payoff given the actions of other players, ignoring the effects of his or her action on the payoffs received by those other players.
an agreement among several producers to obey output restrictions in order to increase their joint profits.
when a firm’s decision significantly affects the profits of other firms in the industry.
(also known as a Nash equilibrium) when each player in a game chooses the action that maximizes his or her payoff given the actions of other players, ignoring the effects of his or her action on the pay-offs received by those other players.
a firm in an industry with only a small number of producers.
one of the two firms in a duopoly.
when a firm attempts to influence the future behavior of other firms.
cooperation among producers, without a formal agreement, to limit production and raise prices so as to raise one anothers’ profits.
cooperation among producers to limit production and raise prices so as to raise one another’s profits.
shows how the payoff to each of the participants in a two-player game depends on the actions of both. Such a matrix helps us analyze situations of interdependence.
a game based on two premises: (1) Each player has an incentive to choose an action that benefits itself at the other player’s expense, and (2) When both players act in this way, both are worse off than if they had acted cooperatively.
the study of behavior in situations of interdependence.