by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Restrictive Practices under Antitrust Law? Antitrust law includes rules against restrictive practices – practices that do not involve outright agreements to raise price or to reduce the quantity produced, but that might have the effect of reducing...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Some Other Approaches to Measuring Monopoly Power in an Industry? Both the four-firm concentration ratio and the Herfindahl-Hirschman index share some weaknesses. First, they begin from the assumption that the “market” under discussion is well-defined, and...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How does Cooperation Affect the Kinked Demand Curve? Because oligopolists cannot sign a legally enforceable contract to act like a monopoly, the firms may instead keep close tabs on what other firms are producing and charging. Alternatively, oligopolists may choose to...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How to Force Cooperation in a Prisoner’s Dilemma? The way out of a prisoner’s dilemma is to find a way to penalize those who do not cooperate. Perhaps the easiest approach for colluding oligopolists, as you might imagine, would be to sign a contract with each other...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How do Oligopolists face a Prisoner’s Dilemma? The members of an oligopoly can face a prisoner’s dilemma, also. If each of the oligopolists cooperates in holding down output, then high monopoly profits are possible. Each oligopolist, however, must worry that...
