227 Glossary: Oligopolies
- cartel
- a group of firms that collude to produce the monopoly output and sell at the monopoly price
- collusion
- when firms act together to reduce output and keep prices high
- duopoly
- an oligopoly with only two firms
- game theory
- a branch of mathematics often used by economists that analyzes situations in which players must make decisions and then receive payoffs based on what decisions the other players make
- imperfectly competitive
- firms and organizations that fall between the extremes of monopoly and perfect competition
- kinked demand curve
- a perceived demand curve that arises when competing oligopoly firms commit to match price cuts, but not price increases
- oligopoly
- when a few large firms have all or most of the sales in an industry
- prisoner’s dilemma
- a game in which the gains from cooperation are larger than the rewards from pursuing self-interest
