Oligopoly: Presented by
Oligopoly: Presented by
Oligopoly: Presented by
Presented by:
Mr Stephen A. Silverio
Mr Noel
Ms Emer Villa
OLIGOPOLY
MC
Demand Curve/AR
MR
when price increases above P40 the demand curve becomes more
elastic, but a decrease in price below P40 makes the demand curve
less elastic.
Kinked Demand Curve Model
SUMMARY:
also known as Sweezy oligopoly Model
Introduced by Paul Sweezy in 1939 in an attempt to
explain price rigidity.
Firms believe rivals match price cuts, but not price
increases. Small price increases result in relatively large
decrease in quantity demanded. Large price decreases are
needed to gain relatively small increase in quantity
demanded
When price increases the demand curve becomes
more elastic, but a decrease in price the demand curve
tend to be less elastic.
Collusion Model
Collusion Model
Types of Cartel:
Advertising Game
Given these alternative outcome what would be the “best” option, that is,
most profitable outcome?
Game Theory
Given these alternative outcome what would be the “best” option, that is,
most profitable outcome?
Overall Comparison:
Reference: AmosWeb.com