Key Terms of an Oligopoly

2. Matrix shows possible combination of outcomes
3. Equilibrium game theory outcome that occurs when both players choose the action that is the best for them given the action of the other players and reach the same payoff
5. when firms act together to reduce output and keep prices high
8. demand curve a perceived demand curve that arises when competing oligopoly firms commit to match price cuts, but not price increases
9. dilemma a game in which the gains from cooperation are larger than the rewards from pursuing self-interest
11. an oligopoly with only two firms
12. competitive payoffs based on what decisions the other players make firms and organizations that fall between the extremes of monopoly and perfect competition

1. competition many firms competing to sell similar but differentiated products
2. dilemma it shows how, in certain situations, all sides can benefit from cooperative behavior rather than self-interested behavior.
4. product- a product that is perceived by consumers as distinctive in some way
6. when a few large firms have all or most of the sales in an industry
7. a group of firms that collude to produce the monopoly output and sell at the monopoly price
10. Theory a branch of mathematics often used by economists that analyzes situations in which players must make decisions and then receive