Interdependence Duopoly Duopolist Collusion Cartel Noncooperative behavior Game theory Payoff Payoff matrix Prisoners’ dilemma Dominant strategy Nash equilibrium Noncooperative equilibrium Strategic behavior Tit for tat Tacit collusion Antitrust policy Price war Product differentiation Price leadership Nonprice competition Zero- Excess capacity Brand name | in game theory, the equilibrium that results when all players choose the action that maximizes their payoffs given the actions of other players, ignoring the effect of that action on the payoffs of other players; also known as noncooperative equilibrium. in game theory, a strategy that involves playing cooperatively at first, then doing whatever the other player did in the previous period. the relationship among firms in which the outcome (profit) of each firm depends on the actions of the other firms in the market. cooperation among producers to limit production and raise prices so as to raise one another’s profits. an oligopoly consisting of only two firms. legislative and regulatory efforts undertaken by the government to prevent oligopolistic industries from becoming or behaving like monopolies. in game theory, a diagram that shows how the payoffs to each of the participants in a two- the study of behavior in situations of interdependence. Used to explain the behavior of an oligopoly. a name owned by a particular firm that distinguishes its products from those of other firms. the attempt by firms to convince buyers that their products are different from those of other firms in the industry. If firms can so convince buyers, they can charge a higher price. one of the two firms in a duopoly. 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. an agreement among several producers to obey output restrictions in order to increase their joint profits. competition in areas other than price to increase sales, such as new product features and advertising; especially engaged in by firms that have a tacit understanding not to compete on price. in game theory, the reward received by a player in a game (for example, the profit earned by an oligopolist). cooperation among producers, without a formal agreement, to limit production and raise prices so as to raise one anothers’ profits. actions taken by a firm that attempt to influence the future behavior of other firms. in game theory, the equilibrium that results when all players choose the action that maximizes their payoffs given the actions of other players, ignoring the effect of that action on the payoffs of other players; also known as Nash equilibrium. an economic balance in which each firm makes zero profit at its profit- when firms produce less than the output at which average total cost is minimized; characteristic of monopolistically competitive firms. a pattern of behavior in which one firm sets its price and other firms in the industry follow. in game theory, an action that is a player’s best action regardless of the action taken by the other player. actions by firms that ignore the effects of those actions on the profits of other firms. a collapse of prices when tacit collusion breaks down. |
Interdependence
Duopoly
Duopolist
Collusion
Cartel
Noncooperative behavior
Game theory
Payoff
Payoff matrix
Prisoners’ dilemma
Dominant strategy
Nash equilibrium
Noncooperative equilibrium
Strategic behavior
Tit for tat
Tacit collusion
Antitrust policy
Price war
Product differentiation
Price leadership
Nonprice competition
Zero-
Excess capacity
Brand name