Monopolistic competition and Oligopoly
Oligopoly
A market structure characterize by a few large producers, of either standardized or differentiated products, operating in industries with extensive entry barriers. These producers are price makers and behave strategically when making decisions related to the features, prices, and advertising of their products
Monopolistic competition
A market structure characterized by a relatively large number of sellers producing a differentiated product, for which they have some control over the price they charge, in a market with relatively easy market entry and exit
Payoff matrix
a table showing the potential outcomes arising from the choices made by decisionmakers
Dominant strategy
A situation in which a particular strategy yields the highest payoff regardless of the other player's strategy
Collusion
A situation in which individuals, firms, or any group of actors coordinate their actions to achieve a desired outcome. Collusion is generally used to achieve an outcome that would not be possible in the absence of coordinated actions, and it is typically associated with illegal or anticompetitive behaviors
Mutually interdependent
A situation in which the strategy followed by one producer will likely affect the profits and behavior of another producer
Nash equilibrium
An outcome in which, unless the players collude, neither player has an incentive to change his or her strategy
Product differentiation
The strategy of distinguishing one firm's product from the competing products of other firms
Game theory
The study of the strategic behavior of decision makers
Excess capacity
The underutilization of resources that occurs when the quantity of output a firm chooses to produce is less than the quantity that minimizes average total cost
Deadweight loss
The value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium