ARE100B Week 4 Notes - Whitney
ARE100B Week 4 Notes - Whitney ARE 100B
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This 3 page Class Notes was uploaded by Jessica Notetaker on Saturday October 31, 2015. The Class Notes belongs to ARE 100B at University of California - Davis taught by Marilyn Whitney in Summer 2015. Since its upload, it has received 88 views. For similar materials see Intermediate Microeconomics in Agricultural & Resource Econ at University of California - Davis.
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Date Created: 10/31/15
Stackelberg Model a What is it Noncooperative oligopoly model When a negative becomes a positive If firms have different cost function each leader or follower might produce larger but the leader will produce more and the follower will produce less if both were Cournot wig suwow iftmo have chs gov Qvl aha invert Amd b 9 200 AG Fwy W5 estJV mmmng V m 1 a Cnmoggv um Sher RM 6am mason Samson Va tau 1 Q39 v TC Q1 an quotM l3933 a 206 3539 1f 3d quot quot AW 6 39 201 aq39 W V23 aqua ode Osman F mum b Canaan l 10 AR n 39o lt z 30quot Anguso 4v gt toaqn napo 0 lac Act 39 49 Se RQBa alwaooAb mime Sdu euderquot Min Rug 091 mo FVJ Vet eqm m 3 twatu Bootsac 1300145393 1 30 2 3 r 2 0 l1 a gtsmubu3 We o1 3 39Jom 539 2D quot39 o 31quot a 9415wu15h91uwm so II Cooperative Models of Oligopoly a Kinked Demand Curve Model Implicit cooperation by firms When firms raise prices quantity decreases meaning they lose more customers In many markets marginal cost varies frequently like the fuel price b Price Leadership Implicated cooperation One firm states its price and others eventually copy this price Example Dominant Firm i ibo lm Ftocn 5 0 4000 0009 l i I arcbc 0cm 10 50 051 how1 2 3m irons chTcsxTCs 0 quotQ 39 02 p 15 nd W3 umcm aF mvm w C 1 v nc gt 1 0415 2 each ltx c Firm iSvuw ilt m Va ch 9 V quotgt 35 quot25 l 5 G x 2LdalusP239555 ampTSOPSoj Sup Sac on lemon25 k wxe Genus 03 AM W F1 A M M Gwen39s feai uol AW 3 Q C3153 Q quotI 14000me SOP6 53 0 4050 oso Q 1 be ac mowxst Y3 439 oOOlabu Set nmim ErmaQt s noowm 25 3006 0 lat Ssal P ticgoonsggxg Sov or x h ts cQ Nom83 gt upquot 253A1325 ibo5 Q3 45053 E QQ3Q i 583 N V39 c Cartel Explicit collusion Example 3 C Maxquot nvu Cs v dJ39H 39 msquot 1 adv Vc mun KQ QW m quot 39 d 7a 5 HQG gt vtc zoo162 SMJ39V an ozgqj 3 2003917C39vir3 33 7 83 qu39a qu a r l50 M1 and V 9055 39Q Kn Tquot39 C III IV Wt b 397 3962quot230 3Ebbl Equot 3132 l P am m 53EYJJL o Game Theory Each player in a game makes strategic choices and then an outcome appears Ex board games outdoor games politics oligopoly etc a Prisoner s Dilemma There are 2 players prisoners and each have 2 different choices to declare innocence and blame other player or plead guilty to a lesser charge If both prisoners blame each other then they both die If they both plead guilty they bother serve time in prison lesser charge If first pleads guilty to lesser charge and second declares innocence first one will die and second will be set free and Vice versa b Nash Equilibrium Given what other players do each player chooses his or her best strategy There are different games that can be determined by the kind of payoffs 1 Zero Sum Game eg chess when sum of both players equals zero 2 Constant Sum Game eg battle for market share 3 NonConstant Sum Game eg profit NonCooperative Games Dominant strategy is what s best regardless of what others do
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