Chapter 15: Oligopoly and Strategic Behavior
1. In addition to chess or bridge as illustrations of strategic interdependence, you could include many
2. A good way to get a class discussion going is to ask whether the competition among fraternities
3. One illustration of the importance of the underlying assumption of strategic interdependence in
olig
4. Note that the possibility of internet shopping may decrease transport cost differences between firms,
and increase the number of relevant competitors, converting the analysis of some industries from
oligopoly to that of monopolistic competition.
5. For oligopoly analysis, it is important for students to see that we are increasing the numbers of both
decisionmakers and variables being considered, so that the level of analytical determinacy falls
dramatically, and the result depends on far more things than in simpler comparative static market models.
6. Point out to students that colluding on test preparations or assignments is an example of how difficult
it is to put together and maintain an effective collusion. For instance, show students that a policy of giving
7. OPEC can be used to show that countries with large oil reserves and those with small oil reserves
would likely disagree about the appropriate price and output strategy because of their different time
8. Remind students that the same principles of collusion now being talked about on the selling side of
9. The cereals case is a good antitrust example to use in discussing the issues involved in oligopoly,
particularly as an example of non-price competition and its analysis.
10. An interesting long run oligopoly example is the U.S. airline industry under CAB regulation of
11. Note that charging a price below the short run profit maximizing level to deter entry can also be
12. In comparing cooperative and non-cooperative games, it can be useful to show students how
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politically informed/not become politically informed payoff matrix showing remaining not informed (rational
voter ignorance) to be the likely result.
14. It is important to note that it is possible for there to be fewer firms and more competitive (pro–