{"id":661,"date":"2011-02-21T22:39:48","date_gmt":"2011-02-22T04:39:48","guid":{"rendered":"http:\/\/opengecko.com\/economics\/oligopoly\/"},"modified":"2011-02-21T22:39:48","modified_gmt":"2011-02-22T04:39:48","slug":"oligopoly","status":"publish","type":"post","link":"https:\/\/opengecko.com\/geckoview\/economics\/oligopoly\/","title":{"rendered":"Oligopoly"},"content":{"rendered":"<p><font size=\"4\">IB Syllabus requirements:<\/font><\/p>\n<p><font size=\"4\">\u2022 Assumptions of the model     <br \/>\u2022 Collusive and non-collusive oligopoly      <br \/>\u2022 Cartels      <br \/>\u2022 Kinked demand curve as one model to describe interdependent behaviour      <br \/>\u2022 Importance of non-price competition      <br \/>\u2022 Theory of contestable markets<\/font><\/p>\n<p><a href=\"http:\/\/www.youtube.com\/user\/BrynJonesOnline\"><strong><font size=\"4\">BrynJonesOnline<\/font><\/strong><\/a><font size=\"4\"> introduces the theory before moving onto Kinked Demand Theory:<\/font><\/p>\n<p><iframe loading=\"lazy\" title=\"YouTube video player\" height=\"349\" src=\"http:\/\/www.youtube.com\/embed\/BLhWq2UtLOA?rel=0\" frameborder=\"0\" width=\"560\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><font size=\"4\"><strong>Cartels<\/strong><\/font><\/p>\n<p><font size=\"4\">This helpful video is by <\/font><a href=\"http:\/\/www.youtube.com\/user\/richardmckenzie\"><strong><font size=\"4\">richardmckenzie<\/font><\/strong><\/a><\/p>\n<p><iframe loading=\"lazy\" title=\"YouTube video player\" height=\"390\" src=\"http:\/\/www.youtube.com\/embed\/ELQ5wluGBfI?rel=0\" frameborder=\"0\" width=\"480\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><font size=\"4\"><\/font><\/p>\n<p><font size=\"4\"><strong>Non Collusion \u2013 Kinked Demand Theory:<\/strong><\/font><\/p>\n<p><font size=\"4\">An <\/font><a href=\"http:\/\/www.reffonomics.com\/textbook2\/microeconomics2\/swiftfile\/otherformsofbusiness\/oligopoly.swf\" target=\"_blank\"><font size=\"4\">animated slideshow<\/font><\/a><font size=\"4\"> on oligopoly focuses on kinked demand theory (from the excellent <\/font><a href=\"http:\/\/reffonomics.com\/reff\/index.html\" target=\"_blank\"><font size=\"4\">Reffonomics<\/font><\/a><font size=\"4\"> ).<\/font><\/p>\n<p><iframe loading=\"lazy\" title=\"YouTube video player\" height=\"390\" src=\"http:\/\/www.youtube.com\/embed\/0GISzf3GjM0?rel=0\" frameborder=\"0\" width=\"480\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><font size=\"4\">The above introduces the \u2018kink\u2019 (by <\/font><a href=\"http:\/\/www.youtube.com\/user\/ACDCLeadership\"><strong><font size=\"4\">ACDCLeadership<\/font><\/strong><\/a><font size=\"4\">). The below is by <\/font><a href=\"http:\/\/www.youtube.com\/user\/pajholden\"><strong><font size=\"4\">pajholden<\/font><\/strong><\/a><font size=\"4\"> and goes into more detail:<\/font><\/p>\n<h3><a href=\"http:\/\/www.youtube.com\/watch?v=5BQPx8SL9F4\" target=\"_blank\"><font size=\"4\">kinked demand curve theory (click on the link to view)<\/font><\/a><\/h3>\n<p><font size=\"4\"><\/font><\/p>\n<p><font size=\"4\">The kinked demand theory can be extended to show how such a non-collusive oligopolistic firm makes a <\/font><a href=\"http:\/\/www.reffonomics.com\/textbook2\/microeconomics2\/swiftfile\/otherformsofbusiness\/oligopolyloss.swf\" target=\"_blank\"><font size=\"4\">loss<\/font><\/a><font size=\"4\">, makes a <\/font><a href=\"http:\/\/www.reffonomics.com\/oligopolyprofit.gif\" target=\"_blank\"><font size=\"4\">profit<\/font><\/a><font size=\"4\"> or <\/font><a href=\"http:\/\/www.reffonomics.com\/textbook2\/microeconomics2\/swiftfile\/otherformsofbusiness\/oligopolybreakeven.swf\" target=\"_blank\"><font size=\"4\">breaks even<\/font><\/a><font size=\"4\"> (again from the excellent <\/font><a href=\"http:\/\/reffonomics.com\/reff\/index.html\" target=\"_blank\"><font size=\"4\">Reffonomics<\/font><\/a><font size=\"4\"> ).<\/font><\/p>\n<p><font size=\"4\"><\/font><\/p>\n<p><font size=\"4\"><strong>Theory of Contestable Markets<\/strong><\/font><\/p>\n<p><a href=\"http:\/\/www.youtube.com\/user\/pajholden\"><strong><font size=\"4\">pajholden<\/font><\/strong><\/a><font size=\"4\"> discusses the theory in his back garden: <\/font><a href=\"http:\/\/www.youtube.com\/watch?v=k3yt1_JWE5Q\" target=\"_blank\"><font size=\"4\">contestable market theory<\/font><\/a><\/p>\n<p><a href=\"http:\/\/www.youtube.com\/user\/economicslessons\"><strong><font size=\"4\">economicslessons<\/font><\/strong><\/a><font size=\"4\"> has produced this video geared towards A Level economics (so the example question at the end is not an IB one):<\/font><\/p>\n<p><iframe loading=\"lazy\" title=\"YouTube video player\" height=\"390\" src=\"http:\/\/www.youtube.com\/embed\/IMSjeJNRcXM?rel=0\" frameborder=\"0\" width=\"480\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<h2><font size=\"4\"><font style=\"font-weight: bold\">Extra:<\/font><\/font><\/h2>\n<p><font size=\"4\">On the interdependency of firms, we should consider John Nash who arrived at the theory of a Nash Equilibrium in which members of a group would serve their own interests by also serving the rest of the group\u2019s interests (as opposed to Adam Smith\u2019s contention that individuals (or firms) will strive to serve their own interests only). This idea was captured in the excellent film A Beautiful Mind and the relevant excerpt can be seen by clicking <\/font><a href=\"http:\/\/www.youtube.com\/watch?v=2d_dtTZQyUM\" target=\"_blank\"><font size=\"4\">here<\/font><\/a><font size=\"4\">.<\/font><\/p>\n<p><font size=\"4\"><\/font><\/p>\n<p><font size=\"4\">On the difficulty of drawing a line between monopolistic competition and oligopoly, view <a href=\"http:\/\/www.reffonomics.com\/textbook2\/microeconomics2\/swiftfile\/otherformsofbusiness\/oligopolycompetition.swf\" target=\"_blank\">this slideshow<\/a> by <a href=\"http:\/\/reffonomics.com\/reff\/index.html\" target=\"_blank\"><font size=\"4\">Reffonomics<\/font><\/a>.<\/font><\/p>\n<p><font size=\"4\"><\/font><\/p>\n<p><font size=\"4\">Finally, for a bit of fun, see how a famous condom manufacturer has approached non-price competition through the power of advertising by clicking <a href=\"http:\/\/adsoftheworld.com\/media\/print\/durex_fathers_day?size=_original\" target=\"_blank\">here<\/a>.<\/font><\/p>\n","protected":false},"excerpt":{"rendered":"<p>IB Syllabus requirements: \u2022 Assumptions of the model \u2022 Collusive and non-collusive oligopoly \u2022 Cartels \u2022 Kinked demand curve as one model to describe interdependent behaviour \u2022 Importance of non-price competition \u2022 Theory of contestable markets BrynJonesOnline introduces the theory before moving onto Kinked Demand Theory: Cartels This helpful video is by richardmckenzie Non Collusion&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,10],"tags":[197,123,190],"class_list":["post-661","post","type-post","status-publish","format-standard","hentry","category-economics","category-ib-economics","tag-microeconomics-2","tag-oligopoly","tag-theory-of-the-firm"],"_links":{"self":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/posts\/661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/comments?post=661"}],"version-history":[{"count":0,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/posts\/661\/revisions"}],"wp:attachment":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/media?parent=661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/categories?post=661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/tags?post=661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}