17 Price DiscriminationSometime a monopolist can get away with charging different prices to different customers.This is called price discrimination.It can lead to higher profits and less of a deadweight loss.
18 Price Discrimination Examples Movie ticketsAirline pricesDiscount couponsFinancial aidQuantity discounts
24 Equilibrium for an Oligopoly Price lower than monopoly price and higher than competitive price.Quantity higher than monopoly quantity and lower than competitive quantity.
25 Nash EquilibriumA situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen.
26 GAME THEORY AND THE ECONOMICS OF COOPERATION Game theory is the study of how people behave in strategic situations.Strategic decisions are those in which each person, in deciding what actions to take, must consider how others might respond to that action.
27 GAME THEORY AND THE ECONOMICS OF COOPERATION Because the number of firms in an oligopolistic market is small, each firm must act strategically.Each firm knows that its profit depends not only on how much it produces but also on how much the other firms produce.
28 The Prisoners’ Dilemma The prisoners’ dilemma is a particular “game” between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial.
31 Actual phone call by one airline president to another ROBERT : I think it’s dumb as hell … to sit here and pound the --- out of each other and neither one of use making a --- dime.HOWARD: Do you have a suggestion for me?ROBERT : Yes, I have a suggestion for you. Raise your --- fares 20%. I’ll raise mine the next morning.HOWARD : Robert, we …ROBERT : You’ll make more money, and I will, too.HOWARD : We can’t talk about pricing!ROBERT: Oh --- , Howard. We can talk about any --- thing we want to talk about.