ECO204
Game Theory & Oligopoly
Part 1: Intro
Ajaz Hussain, Economics, University of Toronto (STG)
,Helpful?
Chapter: Game Theory and Oligopoly
Video Lecture (2020-2021) Part 1
Video Lecture (2020-2021) Part 2
Summer 2023 Final Exam Practice Exercises – I
Summer 2023 Final Exam Practice Exercises – II
Summer 2023 Final Exam Practice Exercises – III
Additional Problems and Zoom Sessions for 2023-2024 Final Exam
Formulas for Prices in Applied Oligopoly Models
Step by Step Instructions on Deriving Prices in Applied Oligopoly Models and Checking for Mixed-Stra
,Ahead: Market Structure and Firms’ Pricing Schemes
• Price Taker
!"! < 40 • ECO101 modelled !!∗
• “Ignored in ECO204” (used to be done for sales & trading)
W
40 ≤ !"! ≤ 60 • Partial Price Makers/Takers -- best analyzed with Game Theory
• In the final two lectures, we’ll do theoretical and applied Oligopoly-Game-Theory:
!"! > 60 Cournot rivalry, Cartel collusion, Stackelberg rivalry, and Bertrand rivalry
• Price Maker
!"" > 90 • Can charge a variety of pricing schemes which, for the time being, are categorized
“uniform pricing” and “price discrimination” (aka customized pricing)
“Agenda”
This Lecture Last Two Lecture
Drop Competition
Firms with Market Power Oligopoly-Game-Th
, ECO 204 Game Theory: Assumptions and Type of Games
Game Theory in ECO204
“Two rational players” with “common knowledge” of all players’ set of actions
“Rational Players”: play to maximize their payoff (“never hurt themselves”)
“Common Knowledge”: Everybody Knows ..
One-Shot Games Repeated Games
(“Static”) (“Dynamic”)
Games with Sequential Moves
Games with Simultaneous Moves
“Follower” moves after observing “Leader’s” move
Players “move” without knowing rivals’ actions
“Solution Technique”: Sub-Perfect Nash Equilibrium
“Mixed Strategies” “Pure Strategies”
Players “play” each of their actions with probability ≥ 0 Players “play” one of their actions with probability 1 and all their
(such that total probability of playing all actions is 1) other actions with probability 0
“Solution Technique”: Nash Equilibrium in Mixed Strategies “Solution Technique”: Nash Equilibrium in Pure Strategies
Game Theory & Oligopoly
Part 1: Intro
Ajaz Hussain, Economics, University of Toronto (STG)
,Helpful?
Chapter: Game Theory and Oligopoly
Video Lecture (2020-2021) Part 1
Video Lecture (2020-2021) Part 2
Summer 2023 Final Exam Practice Exercises – I
Summer 2023 Final Exam Practice Exercises – II
Summer 2023 Final Exam Practice Exercises – III
Additional Problems and Zoom Sessions for 2023-2024 Final Exam
Formulas for Prices in Applied Oligopoly Models
Step by Step Instructions on Deriving Prices in Applied Oligopoly Models and Checking for Mixed-Stra
,Ahead: Market Structure and Firms’ Pricing Schemes
• Price Taker
!"! < 40 • ECO101 modelled !!∗
• “Ignored in ECO204” (used to be done for sales & trading)
W
40 ≤ !"! ≤ 60 • Partial Price Makers/Takers -- best analyzed with Game Theory
• In the final two lectures, we’ll do theoretical and applied Oligopoly-Game-Theory:
!"! > 60 Cournot rivalry, Cartel collusion, Stackelberg rivalry, and Bertrand rivalry
• Price Maker
!"" > 90 • Can charge a variety of pricing schemes which, for the time being, are categorized
“uniform pricing” and “price discrimination” (aka customized pricing)
“Agenda”
This Lecture Last Two Lecture
Drop Competition
Firms with Market Power Oligopoly-Game-Th
, ECO 204 Game Theory: Assumptions and Type of Games
Game Theory in ECO204
“Two rational players” with “common knowledge” of all players’ set of actions
“Rational Players”: play to maximize their payoff (“never hurt themselves”)
“Common Knowledge”: Everybody Knows ..
One-Shot Games Repeated Games
(“Static”) (“Dynamic”)
Games with Sequential Moves
Games with Simultaneous Moves
“Follower” moves after observing “Leader’s” move
Players “move” without knowing rivals’ actions
“Solution Technique”: Sub-Perfect Nash Equilibrium
“Mixed Strategies” “Pure Strategies”
Players “play” each of their actions with probability ≥ 0 Players “play” one of their actions with probability 1 and all their
(such that total probability of playing all actions is 1) other actions with probability 0
“Solution Technique”: Nash Equilibrium in Mixed Strategies “Solution Technique”: Nash Equilibrium in Pure Strategies
