11 Oligopoly and Monopolistic Competition

Anyone can win unless there happens to be a second entry.

—George Ade

Learning Objectives

  1. Explain how firms in a cartel raise their profits by coordinating their actions.

  2. Illustrate how firms independently choose their output levels to determine the Nash-Cournot equilibrium.

  3. Show how firms independently choose their prices to determine the Nash-Bertrand equilibrium.

  4. Explain how two conditions determine the monopolistic competition equilibrium.

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