Week 6

This week we will study firm behavior under monopoly and oligopoly. Oligopolistic markets are imperfectly competitive, lying between perfect competition and monopoly. We will discuss measures of market power, which tell us where a market lies on the continuum between these two extremes. We will also use game theory to consider strategic issues firms face. If there is time, we'll talk about more complicated pricing behavior by firms.

Quiz 8

You may need to do any of the following:

  • Per-unit tax, given inverse D and inverse S
    • Calculate CS, PS, GR, DWL, W*
  • Cournot duopoly
    • Solve for the equilibrium q1C, q2C, PC
    • Calculate the CS, PS and DWL of the duopoly
    • Calculate the markup for the duopoly

Quiz 9

  • Solve an extensive-form game using backward induction
  • Solve for equilibrium in a Stackelberg duopoly
  • Solve a normal-form games for all its pure-strategy Nash equilibria

Next week's quiz and new material on the final (anticipated)

  • Solve a normal-form game for all its Nash equilibria (including mixed-strategy equilibria)
  • Monopoly pricing
    • Setting access and usage fees ("two-part tarriffs")
    • Producing for two markets with different prices ("multimarket price discrimination")
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