Oligopoly is a market structure with few firms. Each firm in the market produces a large share of the total market quantity and hence can influence the market price.

Monopoly is a market structure with only one producer/seller of a good and it does not act as a price taker but as a price setter

1.Government regulations

2.Ownership of a key resource

3.Natural Monopoly

A natural monopoly occurs when economies of scale are so large that one firm can supply the entire market at a lower average cost than two or more firms.

Compared to a perfectly competitive market, a monopoly produces less than
the socially efficient quantity of output and charges a relatively higher price, hence creates a deadweight loss.

Perfect price discrimination is difficult to do for the monopolist because the monopolist needs to know maximum willingness to pay of each consumer for each unit purchased.

1.Collusion

2.Competition

Collusion is an agreement among firms to charge the same price or decide on quantities in cooperation with each other

Competition occurs when each producer maximizes its profits by choosing its own price or quantity without consulting other firms.

1. Rules that determine which actions are allowable
2. Strategies that players employ to attain their objectives in the game
3. Payoffs that are the results of the interaction among the players’ strategies
The payoffs in an oligopoly context are the profits earned as a result of a firm’s strategies interacting with the strategies of other firms.

Nash Equilibrium represents a situation among the interacting firms, each of
which chooses their best strategy given the strategies that all the other firms have already been chosen.

Dominant Strategy: A dominant strategy is the best response strategy for a firm, no matter what strategies other firms use.

Monopolistic competition is a market structure where there are many firms that
sell differentiated products. Each firm has a monopoly over the product it sells, but many other firms make similar products that compete for the same customers.

Uniform pricing

Price discrimination.

A demand curve represents the maximum willingness of consumers to pay the price for each additional unit.

The monopoly faces a trade-off.

In order to increase its output by one unit, a monopoly must reduce the price it charges for every unit and this cut in price reduces the revenue on the units it was already selling.

The output effect and the price effect.

The output effect: More output is sold, so Q is higher, which tends to increase the total revenue.

The price effect: The price falls, so P is lower, this tends to decrease the total revenue.