Oligopoly markets. The strategic behavior of firms. Duopoly. Cournot model. Response curve of the firm. Equilibrium.

An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher costs for consumers.

The market structure in which sellers can influence the price of its product, take into account the reaction of the other vendors on their actions, the entrance to the market is open or closed, and the buyers take price as given, is called an oligopoly.

In an oligopolistic market, sellers should not be a lot, and each must composes a significant share of the market. Example - the car market a particular class.

The market is in Nash equilibrium when no firm wants to change its behaviorunder the condition that the other firms retain their behavior unchanged.

Strategic behavior - the behavior of firms, which is intended to affect the structure of the market.

Strategic behavior - a concept in game theory, which means that players make decisions, take into account the possible reaction of the other players. In economics, law, this term is often used in the context of the negotiation (often in a pejorative sense), and means that the parties enter each other in confusion about their preferences and intentions (ie take a tough negotiating position, do not make concessions, state and threats false threats) in order to obtain some advantage in negotiations

Strategic behavior of the firm - a firm's behavior when the choice of options (price, quantity and quality of the goods) the firm takes into account the possible response of rivals. Strategic behavior is peculiar only to the market oligopoly.

The forms of the strategic behavior of firms - have identified two main forms: 1) non-cooperative interaction of firms, where firms compete with each other and to a greater degree to pursue an independent policy on the market.

2) the cooperative behavior when firms previously agree on joint actions and act on the market very much a " united front."

Cournot model - a model of oligopoly in which firms compete by choosing the level of its production, leaving the market to determine the price of the product produced.

Bertrand model - a model of oligopoly in which firms compete by choosing prices and leaving the market to determine the number of products that they can sell at these prices.

Stackelberg model - a model of oligopoly in which firms move sequentially and the first who started the movement, is the market leader.

Duopoly - market consisting of two firms.

Response curve - the curve showing the functional dependency between any two variables, one of which is taken as the argument, and the other - for its function. (C. p. Could also describe the function of many variables.) Eg., The Cournot - curve characterizing the optimal production company, depending on the anticipated volume of production of a competitor.

15.Competitive market factors of production in the short term. Imperfect competition. Monopsony.

In economics, a monopsony is a market form in which only one buyer faces many sellers.

In the microeconomic theory of imperfect competition, the monopsonist is assumed to be able to dictate terms to its suppliers, as the only purchaser of a good or service, much in the same manner that a monopolist is said to control the market for its buyers in a monopoly, in which only one seller faces many buyers.

In addition to its use in microeconomic theory, monopsony and monopsonist are descriptive terms often used to describe a market where a single buyer substantially controls the market as the major purchaser of goods and services. Examples include the military industry and the space industry.

Monopsony occurs when the following conditions:

· in the labor market interact, on the one hand, a significant number of skilled workers, not unionized, and the other - or one large firm-monopsonist or a few firms, united in one group and acting as a single employer of labor;

· this company (group of companies) employs the bulk of the total number of professionals a profession;

· This type of work has a high mobility (for example, due to social conditions, geographical dispersion, the need to acquire new skills, etc.);

· firm-monopsonist will set the rate of pay, and the workers are either forced to accept a bid, or find another job.