ECONOMICS : MICRO ECONOMICS THEORY III
Columbia University
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MARKETS STRUCTURE V : MICRO-ECONOMICS THEORY III
- Class notes • 14 pages • 2021
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In a Bertrand model, each firm chooses its price given its believes about the price that the 
other firm will choose and the only equilibrium price is the competitive equilibrium. a cartel 
consists of a number of firms colluding to restrict output and maximize industry profit. A 
cartel will typically be unstable in the sense that each firm will be tempted to sell more than 
it’s agreed upon output, if it believes that the other firms will not respond
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MARKETS STRUCTURES IV : MICRO-ECONOMICS THEORY III
- Class notes • 12 pages • 2021
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In a Cournot model each firm chooses its output so as maximize its profits given its believes 
about the other firms choice and equilibrium is realized when each firm finds its expectations 
about the other firm’s choice to be confirmed
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MARKET STRUCTURES III: PRICE LEADERSHIP. (MICRO-ECONOMICS THEORY III)
- Class notes • 10 pages • 2021
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An oligopoly is characterized by a market with a few firms that recognize the strategic 
interdependence. There are several possible ways for oligopolies to behave depending on the 
exact nature of their interaction. In a price leader model, one firm sets its price and the other 
chooses how much it wants to supply at that price. The leader has to take into account the 
reaction of the follower. 
 
 
COMPARING PRICE LEADERSHIP AND QUANTITY LEADERSHIP. 
We have seen how to calculate the equi...
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