Robert H. Frank,
Cornell University
Ian C. Parker,
University of Toronto
| Bertrand duopoly model | An industry in which two firms produce identical goods and each firm chooses its price taking its rival's price as given.
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| Cournot model | An industry in which firms produce identical goods and each firm determines its profit-maximizing output level, taking its rivals' current output levels as given.
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| Dominant strategy | A strategy in a game that (if it exists) produces the best outcome for a player regardless of the strategy chosen by the other player.
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| Monopolistic competition | An industry in which each of a number of firms produces a product that is an imperfect substitute for the products of the other firms and where there is free entry and exit of firms.
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| Nash equilibrium | The combination of strategies in a game such that neither player has any incentive to change strategies given the strategy of his opponent.
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| Oligopoly | An industry in which there are only a few important sellers.
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| Reaction function | A curve that gives the profit-maximizing level of output for one oligopolist for each amount supplied by another.
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| Stackelberg model | An industry in which one firm (the Stackelberg leader) sets its profit-maximizing level of output first, knowing that its rival (the Stackelberg follower) will behave as a Cournot duopolist.
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2002 McGraw-Hill Higher Education