Oligopolies
Collusion- agreement among firms- forms a cartel
Nash equilibrium- choose their best economic strategy given the
strategies that others have chosen, results in a suboptimal outcome
Optimal strategy- best strategy for both
Dominant strategy- best strategy regardless of what other players do
Tacit collusion- no formal agreement, paper trail
Resale price maintenance- sell a good at a certain price determined by
the wholesaler, prevent retailers from competing in price
Predatory pricing- too low price, drive out competitors
Tying- purchase a monopoly good, must purchase another competitive
good at same time, deal on monopoly overcharge on competitive
Average revenue= price
Price effect- increasing production decreases price