Exam 15: Oligopoly

How is a contestable market similar to a perfectly competitive one?

A cartel is a group of firms that

Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly. Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement

Market share in the Widget industry -Using the market shares in the table above, if Widgotech buys Widgette the HHI will

The EU's antitrust chief in November 2008 fined car glass producers Asahi, Pilkington, Saint-Gobain and Soliver more than 1.3 billion euros ($1.66 billion) for price-fixing, the largest sum ever levied by the EU for a cartel. Cartels tend to arise in ________ markets.

The local pizza delivery industry currently has a Herfindahl-Hirschman index (HHI) value of 999 and two of the competing pizza shops have considered merging. Because the merger would raise the HHI by 55 points, the Federal Trade Commission would likely

A single firm in a contestable market is limited in the amount of economic profit it can earn because there

-Suppose the industry for washing machines has only four firms. The market shares are: Firm A, 40 percent; Firm B, 20 percent; Firm C 20, percent; and Firm D, 20 percent. a) What is the Herfindahl-Hirschman Index (HHI)? b) If Firms C and D were to announce a merger, would the Department of Justice oppose the merger?

The Clayton Act of 1914 prohibits ________ if it substantially lessens competition or creates a monopoly.

The Sherman Act

In the market for bottled water, Fresh Springs has a 30 percent share of the market, Swiss Springs has a 27 percent share, L'eau de France has a 13 percent share, and Mountain Water has a 10 percent share. The rest of the market consists of 20 firms with a 1 percent share of the market each. What is the value of the Herfindahl-Hirschman index?

M&M -M&M and Dove are both considering issuing themed holiday candy. The profits for each strategy, regular candy or holiday candy, are summarized in the payoff matrix above. The Nash Equilibrium in this game is that Dove produces ________ and M&M produces ________.

The Federal Trade Commission is an agency charged with

If price fixing by competitors is necessary because without it a firm will go bankrupt, is the price fixing legal?

________ is a group of firms that have colluded to limit their output and raise their price.

For a Nash equilibrium to be possible, all players must ________.

The price in a contestable market is similar to that in a perfectly competitive market because

The first federal antitrust law ever passed was the Sherman Act.

When producers agree to restrict output, raise the price, and increase profits, the agreement is called ________.

Oligopoly differs from perfect competition because a single competitive firm's behavior does not affect the behavior of its competitors while the behavior of a single oligopolistic firm does affect the behavior of its rivals.