Chapter 16

Chapter 16 main focus was on oligopoly, a different type of firm that's not exactly in a perfectly competitive market or monopoly market, but instead something in between the two in an imperfect competition. A different approach has to be taken when dealing with these types of firms as they follow a different market structure than the norm, and whether the amount of firms is actually only a few or many. With only two firms, the oligopoly can be called a duopoly. These two firms can choose whether to cooperate or not, but if they do agree, there might be betrayal from one firm or both about producing more than they were supposed to to increase profit, as the firms have their own self interest that can affect how they act. Due to the self interest, it's hard for firms to actually reach the equilibrium price and instead reach the nash equilibrium, one that gives less profit overall to firms involved. This, along with anti trust acts, causes cartels to be very uncommon overall because of the disagreements caused by human nature.