A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them.
An oligopoly in which the sales of the leading (top four) firms are relatively balanced among them.
A combination of two or more companies into one company.
A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
A merger between firms who have a buyer/supplier relationship. Example: BFGoodrich merging with rubber plantations.
A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company.
A business arrangement in which two or more firms undertake a specific economic activity together. Once the activity is over, the firms go their own way.
A group of firms that collude to limit competition in a market by negotiating and accepting agreed-upon prices and market shares.
An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition.
A table that shows the payoffs that each firm earns from every combination of strategies by the firms.
The theory that studies decision making in situations in which one player anticipates the reactions of other players to its own actions. Firms are mutually interdendent.
Any combination of strategies in which each players' strategy is his or her best choice, given the other players' strategies.
A pricing strategy in game theory in which firms continue to match each others' pricing strategy.
The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them
A particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so.
A firm whose price decisions are tacitly accepted and followed by others in the industry.
The dominate firm in the oligopoly, whose pricing decisions are tacitly followed. The Godfather is the price leader.
Kinked Demand Curve
The demand curve faced by an oligopolist. The curve is more elastic when the firm raises its price than when it lowers its price.
Variations on one good so that a firm can increase market share.
Offering specific goods or services at different prices to different segments of the market. Example: First class versus business class on airlines.