Models of oligopoly behaviour, whether the respective assumptions are realistic and examples where different models might be the most appropriate.

In this essay I am going to talk over models of oligopoly behaviour and analyse them and see whether they be realistic or not and evaluate them with certain examples where they may be nearly suitable. An oligopoly is a trade which consists of few degenerates which sell similar or homogenized products. In this essay I give as well as be looking at a duopoly, which is a marketplace with both unfluctuatings. The Cournot equilibrium, this is where a pair of output levels, one for all(prenominal) unattackable, which ar such that after they are chosen neither steady, has an fillip to change its output level1. To easily understand the Cournot equilibrium, rent us consider a duopoly (a market consisting of two levels). In most markets, the market cost is where supply is equal to demand. Therefore, the expense family 1 sets itself is conditional on the cadence supplied of unassailable 2. When firm 1 chooses the supply quantity, it assumes that the current quantity firm 2 supplies are fixed. Costs can be outlook of a function of its stimulate quantity supplied, because costs of firm 1 are independent of whatever firm 2 supplies. In this market specifically, firm 1s reactivenesss depend on the action of firm 2. A reaction function is used to shew the optimum level of if the other firm changes their supply level.

assumptive that each firm remuneration maximises, therefore the profit functions are: ?1 = (A-b(q1+q2)) * q1 - C(q1)         ?2 = (A-b(q1+q2)) * q2 - C(q2) Firm 2 decides to supply two hundred units on the market; therefore firm 1s profit is depend ant on its own supply to the market: ?1 = (A! -b(q1+200)) * q1 - C(q1) It will then elicit where fringy cost is equal to marginal revenue to profit maximise. Suppose firm 2 increases the quantity supplied... If you want to get a full essay, order it on our website: OrderCustomPaper.com

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