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Basic Oligopoly Models


Headline: Crude Oil Prices Fall, but Consumers in Some Areas See No Relief at the Pump

I.

Introduction

II.

Conditions for Oligopoly

III.

The Role of Beliefs and Strategic Interaction

IV.

Profit Maximization in Four Oligopoly Settings

A.

Sweezy Oligopoly

B.

Cournot Oligopoly

1.

Reaction Functions and Equilibrium

2.

Isoprofit Curves

3.

Changes in Marginal Costs

4.

Collusion

C.

Stackelberg Oligopoly

D.

Bertrand Oligopoly

V.

Comparing Oligopoly Models

A.

Cournot

B.

Stackelberg

C.

Bertrand

D.

Collusion

VI.

Contestable Markets

VII.

Answering the Headline

VIII.

Summary

IX.

Key Terms and Concepts

X.

Conceptual and Computational Questions

XI.

Problems and Applications

XII.

Case-Based Exercises

XIII.

Selected Readings

XIV.

Appendix: Differentiated-Product Bertrand Oligopoly











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