Reference no: EM131400675

Assignment: Competition

Directions:

Research three different models of competition between firms that are highly interdependent (note: there are over a dozen so you should have no problem finding many different models to examine). Discuss the similarities and differences between these special models. Be sure to explain the different circumstances where one model might be more appropriate to use than another. Write up your report in a 750 to 1000 word APA formatted paper (word count does not include title page, Certificate of Authorship, or references) and submit it to the dropbox. MUST INCLUDE REFERENCES AND INTEXT CITATIONS.....

Information that might help understand what the assignment is asking for. I am not sure what it is about...I just haven't had time to check from being so sick...

A competitive market where firms are highly interdependent is Oligopoly market. In case of Oligopoly a few firms dominate the market as barrier to entry prevents new firms to enter the market.The products may or may not be differentiated.Market share is highly concentrated.

Three most important models are:-

a)TheCournot Model : Firms produce homogenous goods. Each firm treats the output of of its competitors as fixed.All firms decide simultaneously.

b) The StackelbergModel : One firm sets its output before other firms do.Thus there is a first mover advantage for the firm.

c) The Bertrand Model : Each firm produce homogenous goods, taking price of its competitors as fixed.All firms decide simultaneously.

Basically the question is about the different types of market structures that are found in the world. Based on the number of firms and interdependence we can have four types of duopoly markets viz. Cournot's duopoly, chamberlain duopoly, bertrand's duopoly and edgeworth duopoly. Again if we move ahead we have oligopoly markets they are of the following types viz. Duopoly,perfect oligopoly, imperfect oligopoly, collusive oligopoly, and non collusive oligopoly.

So we can pick up any of the three from above and easily find out their similarities and differences. Again the best use can be seen from the real world examples for each type of market situation. Like say imperfect oligopoly and perfect oligopoly, over here the products are substitutes for each other just like imperfect oligopoly but in the first case they are perfect substitutes and in the second case they are close substitutes. Although perfect oligopoly exists rarely in the market but then we have cement, aluminum, etc. As an example. Imperfect oligopoly ae found in case of cars, cigarettes, soft drinks, etc.

In the same way we can found two more from the above list.