1 / 3

Section A: Strategic decision making in imperfectly competitive markets

Section A: Strategic decision making in imperfectly competitive markets. Outline of sessions Monopoly, oligopoly collusion and entry deterrence m arket failures due to monopoly power and oligopoly collusion

ianna
Download Presentation

Section A: Strategic decision making in imperfectly competitive markets

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Section A: Strategic decision making in imperfectly competitive markets • Outline of sessions • Monopoly, oligopoly collusion and entry deterrence • market failures due to monopoly power and oligopoly collusion • Revision simultaneous moves games – Nash equilibrium, dominant strategy equilibrium • Prisoners’ dilemma, collusion and trade – more game theory, examples of markets where there is collusion • Entry barriers/deterrence, credible threats– sequential games • Case studies: • Hawaiian Airlines, General Electric Company and Westinghouse Electric Company, Washington Post

  2. Suggested reading • For the theory and the business applications: • Allen et al. 2007. Managerial Economics 7th edition. Norton. Parts 4 and 6 • Kreps, D. M. 2004. Microeconomics for Managers. Norton. Chapters 21-23 • Frank, R. H. 2008. Microeconomics and behaviour. McGraw Hill. Chapters 12-13 • Wall,S., Minocha, S. and Rees, B. 2010. International Business, Pearson. Chapter 7 • Dixit, A., Reiley, D. H. and Skeath, S. 2009. Games of Strategy, 3rd Edition , Norton • Rasmusen, E. 2007. Games and Information, Blackwell. Chapters 1-2, 4-5 • Carmichael, F. 2004. A Guide to Game Theory, Pearson. Chapters 1-4, 7-8 • For the league sports application: • Grimes, P, Register, C. and Sharp, A. 2009. Economics of Social Issues, McGraw Hill. Chapter 9 • Plus sports economics texts of which there are many e.g. Sandy, Sloane and Rosentraub, The Economics of Sports, Palgrave. Chapters 1-6

  3. Objectives • By the end of section A you should be able to: • Explain why collusion between firms is in general likely to be undesirable from the perspective of consumers. • Explain why game theorists predict that collusion between oligopolists is likely to be fragile unless there is some possibility of repetition in the longer term and/or a large ‘swing’ producer or collusion is in the interests of consumers. (Collusion) • Use game theory to explain what is implied by a credible threat to fight the entry of a new firm into an industry. Use your analysis to show how an incumbent monopolist (or oligopolistic cartel) might be able to deter entry even though fighting entry is costly. (Entry barriers and entry deterrence) • Use case studies to illustrate how firms collude, erect entry barriers and fight entry and to explain the idea of a credible threat.

More Related