The Prisoners’ Dilemma in the airplane industry Games of Strategy Home Assignment Tamás Seres Introduction 3 The Prisoners’ Dilemma 3 An Oligopolistic market: 5 The Case Study 6 Conclusion 8 References: 8 Introduction In today’s world the Prisoners’ Dilemma is a common phenomenon in business‚ politics and in social life as well. This paper will analyze a real life example. It will describe the airplane manufacturing industry and their two giant manufacturers:
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Chapter 14 1. 4 main types of market structure based on number of firms in the industry and product differentiation: perfect competition‚ monopoly‚ oligopoly‚ and monopolistic competition. 2. A monopolist is a producer who is the sole supplier of a good without close substitutes. An industry controlled by a monopolist is a monopoly. 3. The key difference between a monopoly and a perfectly competitive industry is that an individual‚ perfectly competitive firm faces a horizontal demand curve but
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some historical notes 3.3 Electoral competition 68 3.4 The War of Attrition 75 3.5 Auctions 79 Auctions from Babylonia to eBay 79 3.6 Accident law 89 Notes 94 67 4 Mixed Strategy Equilibrium 97 4.1 Introduction 97 Some evidence on expected payoff functions 102 4.2 Strategic games in which players may randomize 103 4.3 Mixed strategy Nash equilibrium 105 4.4 Dominated actions 117 4.5 Pure equilibria when randomization is allowed 119 4.6 Illustration: expert
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Perfect Competition: 1. Same product + No barriers to entry + No NPCF easy to switch. 2. Increase P slightly above market P‚ no sales demand is perfectly elastic. 3. D curve is horizontal at the P determined by the intersection of market S&D curves Profit Maximzing decision 1. Since MR=MC 2. Set P (price) = MC 3. MR curve = Demand curve 4. Firms can sell all they want at this market price Q* is the profit maximizing level of output. 1.For output < Q*‚ P < MC. Increase output
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~. Conditions fo‚ monopolistic competition Consider the monopolistically competitive market structure‚ which has some features of perfect competition and some features of monopoly. A monopolistically competitive market has the following attributes: product differentiation‚ free entry‚ and many sellers ". Close Explanation: A Monopolistic competition has the attribute that there are many firms competing for the same group of customers. Similar to monopolists‚ firms under monopolistic competition
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Mock Final Examination Managerial Economics Prof. Volker Hoffmann Prof. Thomas Rutherford Florian Landis February 10‚ 2012 N.B. Mock questions related to Professor Hoffmann’s case studies are not included here. 1 Multiple Choice Note the one correct answer on your answer sheet. 1. Which of the following statements is most likely true regarding economic and accounting profits? A. Economic profits minus accounting profits generally equal zero. B. Economic profits plus accounting profits generally
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Compared to the 1986 market price of $70 per pound shipping costs only account for 0.002% of the market price‚ hardly a significant factor of concern even given NS’s large volume. Lesson 1 of game theory suggests‚ “you must [first] understand the payoffs and objectives of the other parties you are interacting with.”3 Therefore the next two sections explore NS’s potential objectives regarding competitor entry strategy. Thinking Ahead Reasoning backwards: Reasons for Accommodation It may seem counter
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Problems by Command 1. Information collection 2. Principal-agent 3. Disagreement among multiple decision-makers. Arrows’ impossibility theorem. Paradox of voting. 4. Enforcement Coordination by Market Princes as signals of scarcity/abundance Induces coordination Requires much less info No enforcement costs No principal-agent problem No problem with multiple decision makers Qualification: some command systems exist within a market (eg firms) Public Good Has free-rider problem
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frequently apply game theory‚ however‚ are small number settings in which individual decisions and welfare are interdependent. In such settings‚ each person’s welfare depends‚ in part‚ on the decisions of other individuals "in the game." i. In Cournot duopoly‚ each firm’s profits depend upon its own output decision and that of the other firm in the market. ii. In a setting where pure public goods are consumed‚ one’s own consumption of the public good depends in part on one’s own production level of
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the companies that have a duopoly reap the full benefits of controlling the price and output in the market. But this makes it very difficult other companies to enter the market or survive in the long run In Australia the best example of a duopoly is perhaps Woolworths and Coles. Lets take the case of the Woolworths and Coles Duopoly to explain the advantages and disadvantages of a duopolistic market structure that exists in the Australian Market Advantages of a Duopoly from a company viewpoint
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