Oligopoly I

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Session Overview


We have already learned about the operation of two very different types of markets: perfectly competitive markets and monopolists. However, most markets don’t fall into either category. For example, think of the market for soda - both Pepsi and Coke are major producers, and they dominate the market. This type of market structure is known as an oligopoly, and it is the subject of this lecture.

Learn about the prisoner’s dilemma in this lecture. Image courtesy of Sheep purple on Flickr.

Keywords: Oligopoly; cartel; game theory; Nash equilibrium; Cournot model; duopoly; non-cooperative competition.

Session Activities


Before watching the lecture video, read the course textbook for an introduction to the material covered in this session:

  • [R&T] Chapter 11, "The World of Imperfect Competition."
  • [Perloff] Chapter 12, "Pricing and Advertising." (optional)

Lecture Videos


Check Yourself

Concept Quiz

This concept quiz covers key vocabulary terms and also tests your intuitive understanding of the material covered in this session. Complete this quiz before moving on to the next session to make sure you understand the concepts required to solve the mathematical and graphical problems that are the basis of this course.


Further Study

These optional resources are provided for students that wish to explore this topic more fully.

Other OCW and OER Content

14.12 Economic Applications of Game Theory, Fall 2005. MIT OpenCourseWare An in-depth course on game theory.


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