Question

For each market listed below, determine whether it is best characterized as a Cournot oligopoly, Stackelberg oligopoly, or Bertrand oligopoly. a. Oil production. Each firm produces output independently and the market price is determined by the total amount produced. Bertrand oligopoly Stackelberg oligopoly Cournot oligopoly

Answer 1

Answer:

a. Cournot oligopoly

b. Stackelber oligopoly

c. Bertrand oligopoly

Explanation:

a.

In Cournot's oligopoly model, companies will make similar decisions to their competitors, including the amount produced by each company. A perfect competition situation occurs, where there is no differentiation and the balance is not influenced by market supply and demand, but by the action similar to the competitor, companies estimate how much each competitor will produce and thus determine their level of production to increase. your profits.

b.

Stackelberg's model is based on imperfect competition, meaning there is no cooperation between companies, whichever is the most recognized with the highest brand value and the most capable of leading the market will be responsible for establishing the quantity produced, and so the others will observe the lead company's decision to decide their production quantity from there.

c.

Bertrand's model is also characterized as imperfect competition, where there is no cooperation and differentiation between products, in this model the strategic focus is on price rather than quantity. Consumer buying behavior will be influenced by the company that sets the lowest price, so equilibrium will occur when companies set the same price.