Game theory is often used to explain pricing in
monopoly markets, where the monopoly tries to fool the regulators and get a higher price |
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situations where a firm has a natural monopoly |
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oligopoly markets |
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any unregulated market |
Economies of scale are achieved by
producing larger quantities |
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producing smaller quantities |
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producing in a country with a larger economy. |
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becoming a monopoly |
An oligopolistic market
has a small number of rival firms, and each is large relative to the size of the market. |
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is characterized by firms that merely take the price that is determined by the forces of supply and demand in the market. |
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has low entry barriers facing firms that may be interested in entering the market. |
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has a large number of firms that are small relative to the size of the market. |
1. GAME THEORY IS OFTEN USED TO EXPLAIN OLIGOPOLY MARKETS . THIS IS SO BECAUSE WHEN THE FIRM GET INTO ILLEGEAL AGREEMENTS OR PRICE FIXING BEHAVIOURS SO IN THIS MARKET GAME THEORY HELPS TO PREDICT THE OUTCOMES .
2. ECONOMIES OF SCALE IS ACHIVIED BY PRODUCING LARGE QUANTITES .WHEN WITH LESSER INPUT COSTS LARGE UNITS OF GOODS ARE PRODUCED SO THE PURPOSE IS ACHIEVED .
3.AN OLIGOPOLISTIC MARKET HAS SMALL NUMBER OF RIVAL FIRMS AND EACH IS LARGE RELATIVE TO THE MARKET. IN THIS TYPE OF MARKET SELLERS ARE VERY LESS ,BARRIWERS ON ENTRY AND EXIT ARE THERE . SO EACH FIRM INFLUNCES THE MARKET .EACH AND EVERY FIRM PRODUCES A BIG AMOUNT OF SHARE FOR THE MARKET , SO SLIGHT CHANGE IN THE BEHAVIOUR OF ONE FIRM WILL AFFECT THE MARKET SHARES OF OTHER FIRMS WHICH ARE RIVALS .
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