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Copyright © 2011 Cengage Learning 17 Oligopoly
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Figure 1 The Four Types of Market Structure Tap water Cable TV Monopoly (Chapter 15) Novels Restaurants Monopolistic competition (Chapter 16) Chocolate bars Crude oil Oligopoly (Chapter 17) Number of firms? Perfect Wheat Milk competition (Chapter 14) Type of products? Identical products Differentiated products One firm Few firms Many firms Copyright © 2011 Cengage Learning
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Table 1 The Demand Schedule for Water Copyright © 2011 Cengage Learning
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Figure 2 The Prisoners’ Dilemma Mr Black’ s decision Confess Mr Black gets 8 years Mr Pink gets 8 years Mr Black gets 20 years Mr Pink goes free Mr Black goes free Mr Pink gets 20 years gets 1 yearMr Black Mr Pink gets 1 year Remain silent Remain Silent Mr Pink’s decision Copyright © 2011 Cengage Learning
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Figure 3 An Oligopoly Game Saudi Arabia’s decision High Production High production Saudi Arabia gets $40 billion Iran gets $40 billionIran gets $60 billion Iran gets $30 billionIran gets $50 billion Low production Low production Iran’s decision Saudi Arabia gets $50 billion Saudi Arabia gets $30 billion Saudi Arabia gets $60 billion Copyright © 2011 Cengage Learning
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Figure 4 An Arms Race Game Decision of Iran Arm Iran at risk Israel at risk Iran at risk and weak Israel safe and powerful Iran safe and powerful Israel at risk and weak Iran safe Israel safe Disarm Decision of Israel Copyright © 2011 Cengage Learning
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Figure 5 An Advertising Game Marlboro’ s decision Advertise Marlboro gets $3 billion profit Camel gets $3 billion profit Camel gets $5 billion profit Marlboro gets $2 billion profit Camel gets $2 billion profit Marlboro gets $5 billion profit Camel gets $4 billion profit Marlboro gets $4 billion profit Don’t advertise Don’t Advertise Camel’s decision Copyright © 2011 Cengage Learning
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Figure 6 A Common Resources Game Shell’s decision Drill two wells Drill two wells Shell gets €4 million profit BP gets €4 million profit BP gets €6 million profit Shell gets €3 million profit BP gets €3 million profit Shell gets €6 million profit BP gets €5 million profit Shell gets €5 million profit Drill one well Drill one well BP’s decision Copyright © 2011 Cengage Learning
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Figure 7 Jack and Jill’s Oligopoly Game Jack’s decision Sell 40 litres Sell 40 litres Jack gets €1600 profit Jill gets €1600 profit Jill gets €2,000 profit Jack gets €1500 profit Jill gets €1500 profit Jack gets €2000 profit Jill gets €1800 profit Jack gets €1800 profit Sell 30 litres Sell 30 litres Jill’s decision Copyright © 2011 Cengage Learning
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