Intermediate Microeconomics: Imperfect Competition - Oligopoly and Monopolistic Competition, Part 2

This video represents part 2 of the set on videos in which I discuss oligopoly and monopolistic competition. The discussion follows chapter 11 of the Goolsbee, Levitt, and Syverson text.
Dr. Azevedo
Department of Economics
University of Central Missouri

[@dimplegrover2658]

I have been waiting for your videos from so long. Thank you for helping out students. Your way of teaching is superb!!

[@DrAzevedoEcon]

Thank you! Glad to help!

[@madlan9912]

in Cournot model, the first firm will always respond to the qty other firm produce. Then the second firm also will respond ti the first respond, then again and again until it's finally reach the Nash Eq. But, why the same thing didn't happen in 10:30 ?

[@DrAzevedoEcon]

One of the differences between the models is how the firms make their decisions. Sometimes they have to make them simultaneously, while other times one firm gets to go first. Don't think of it as a back-and-forth. With the Stackelberg model, one firm moves first and the other firm reacts...end of story. With the Cournot, both move at the same time....end of story. There's no back-and-forth with the Cournot model. That discussion with the response function where I started with firm 1 producing 27 units and then show how firm 2 would respond, etc., isn't intended to illustrate a back-and-forth process between the firms....it's meant to illustrate why they would choose the outcome where the response curves intersect. That outcome is the only one where each is responding optimally to what the other firm is doing.

[@madlan9912]

@@DrAzevedoEcon thank you so much for such a reply and the explanation 😊

[@clarabuchle5563]

If i understood correctly, the short cut to get to the reaction functions bertrand with differentiated goods, only works when MC=0, or does it work other Times aswell?

[@DrAzevedoEcon]

That's correct. However, it wouldn't be hard to work out the algebra for a marginal cost that is greater than zero.

[@yusraadil2736]

Hi, will you be doing chapter 12 for Goolsbee, Levitt, and Syverson text or Game Theory? Would help alot!! Thankyou!

[@DrAzevedoEcon]

Unfortunately, I don't have a video for that chapter yet. I'll add it to the list of chapters I need videos for.

[@ABIGAILOKON-hf6gq]

This lecture is very helpful

[@DrAzevedoEcon]

Glad to help!

[@saviagulzar8995]

Isn't MR=d(TR)/dq? But you have differentiated with respect to p. Can we do that? 21:56

[@DrAzevedoEcon]

You are absolutely correct that this would be the definition of MR when the firm chooses quantity. However, with the Bertrand model, the firms are choosing price. This means that you need to differentiate with respect to the choice variable....price.

[@saviagulzar8995]

@@DrAzevedoEcon Thank you sir.