1. 1 Welcome to EC 209: Managerial Economics- Group A By: Dr. Jacqueline Khorassani Study Guide Week Ten (Sorry this week I am a little late.)

2. 2 Chapter 9 Basic Oligopoly Models

3. 3 What are the characteristics of an oligopoly? How is a firm’s demand curve if –Rivals do not react to your price changes? –Rivals match your price changes? –Rivals match your price reductions but not your price increases?

4. Cournot Model What are the assumptions of the model? What is the best response function? –Mathematical deviation? –Definition? –Graphical representation? What is the Cournot Equilibrium? –How does an increase in marginal cost affect the equilibrium? What are the effects if the firms form a cartel and act like a Monopoly? –Effect on profits? –Is the Monopoly stable? Why or why not?

5. 5 Stackelberg Model What are the assumptions of the model? Equilibrium –How is it achieved? –How does it compare to the Cournot Model?

6. 6 Bertrand Model What are the assumptions of the model? Equilibrium –How is it achieved?

7. 7 Contestable Markets What are the assumptions? What are the implications?

8. 8 Chapter 10 Game Theory: Inside Oligopoly

9. 9 What is a game? What is a payoff? What is a strategy? What are non-cooperative vs. cooperative games? What are simultaneous-move games versus sequential move games? What are one-shot game versus repeated games? What are normal form games? What is a Nash equilibrium?

10. 10 One Shot Games –Pricing games? –Market share games? –Advertising games? –Coordination games? –Monitoring employees?

11. 11 Infinitely repeated games Pricing games? What are the factors affecting collusion in repeated games?

12. 12 Finitely Repeated Games: Uncertain final period Characteristics? Pricing Games?

13. 13 Sequential (multistage) games Characteristics? Equilibrium? Pricing to prevent entry games?

14. 14 Games in Which Timing Matters What is a credible threat? What is a strategic move? What is a credible promise? What is a commitment problem? What is a commitment device?