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RECENT ADVANCES IN OLIGOPOLY THEORY FROM A GAME THEORY PERSPECTIVE
Author(s) -
Ulph Alistair
Publication year - 1987
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.1987.tb00030.x
Subject(s) - oligopoly , economics , game theory , microeconomics , competition (biology) , cheating , scope (computer science) , imperfect competition , perspective (graphical) , investment (military) , strategic interaction , industrial organization , perfect information , repeated game , cournot competition , computer science , ecology , social psychology , artificial intelligence , politics , law , political science , programming language , biology , psychology
. This paper surveys the contribution that recent developments in game theory have made to the understanding of oligopoly theory. It is argued that conventional models suffer from the problem that there are a number of solution concepts offered with little guidance as to which should be selected, and this is related to the static nature of the models employed. One important development in game theory has been the analysis of repeated games, and when applied to oligopoly theory this suggests that outcomes may be more cooperative than conventional theory suggests. Related to this is the requirement that firms employ credible threats to punish cheating from cooperative outcomes, and the paper examines the extent to which imperfect information may restrict the scope of firms to employ such punishments. One way in which firms may seek to make threats credible is through strategic investments, for example in production capacity, and the paper explores how competition over price or output is integrated with competition over instruments for strategic investment.