1. CHARACTERISTICS
   1. HIGH CONCENTRATION
      1. FEW firms
         1. dominate significant portion of M
         2. exercise M power
         3. mutually independant
            1. consider actions of rival
   2. HOMOGENOUS / DIFFERENTIATED PRODUCTS
      1. standardised
         1. soft drink
            1. Pepsi vs Coca-cola
         2. mobile carrier
            1. vina, viettel, and mobifone...
      2. differentiated
         1. phone manufacturer
            1. Nokia, HTC, Samsung
   3. HIGH BARRIER TO ENTRY
      1. economies of scale
         1. LRAC
            1. a typical firm won't reach the minimum point on its LRAC
            2. until it has produced a large Q of industry sales
            3. have room for few firms
      2. government-imposed barrier
         1. employ lobbyist
            1. convince legislators
            2. pass laws favorable to the economic interests
         2. patents
            1. DEF
            2. encourage research & develope
            3. improved product
            4. efficient production approach
            5. during years patents are in force
            6. charge high P
            7. economic P
         3. barriers to international trade
            1. tariff
            2. quota
            3. on FOREIGN COMPETITION
         4. occupation licensing
            1. restrict numbers of people with license
            2. raise P
      3. ownership -> key input
         1. eg: De Beers Company
            1. control the output of most of the world's dismond mines
   4. COMPETITION
      1. Merger
         1. greater power
         2. manipulate Rs suppliers
      2. Non-price
         1. NOTIONS
            1. distinguished products based on attributes
            2. goods
            3. craftmanship
            4. product innovation
            5. service
            6. advertising
            7. promotion
            8. discounts
            9. different price schemes
            10. distribution
            11. customer focus
         2. BENEFITS
            1. more profitable than lower P
            2. avoid P wars
      3. collusions
         1. fixed high price
         2. restrict the quantity
         3. Organisation of Petroleum Exporting Countries
2. GAME THEORY
   1. DEFINITION
      1. a framework analysing chosen strategies
      2. BASE
         1. assumptions made about rivals’ strategies
            1. pricing
            2. advertising
            3. product range
            4. customer groups
      3. ELEMENTS
         1. set of PLAYERS
         2. set of INDEPENDANT STRATEGIES
         3. PAY-OFF for each combination of strategies
   2. DOMINANT STRATEGY
      1. JETSTAR strategy
         1. VA sets high P
            1. Jetstar low P
         2. VN sets low P
            1. Jetstar low P
      2. VA strategy
         1. J sets high P
            1. VA low P
         2. J sets low P
            1. VA low P
      3. NASH EQUILIBRIUM
         1. the point where firms doing the best it can given the others’ strategies.
      4. low P
      5. low P
   3. MAXIMIN STRATEGY
      1. pay-off
         1. the profit for pursueing strategy
      2. DEF
         1. maximise the minimum pay-off
      3. risk of the firm
         1. compare the risk
         2. better minimum pay-off
   4. COLLUSION
      1. PARETO OPTIMUM
         1. where both firms cooperate => increase mutual pay-off
   5. example
      1. dominant strategy
         1. nash equilibrium
      2. maximin strategy
      3. collusion
3. COLLUSION
   1. uncertainty
      1. inability to predict strategies of rivals
      2. virtually impossible to predict
         1. DC
         2. MR
   2. COLLUSIVE PRICING MODEL
      1. SECRET agreement
         1. fix price
         2. divide up/share the market
         3. restricting competition among themselves
      2. INCENTIVES
         1. Remove uncertainty
         2. Avoid price war
         3. Increase profits
         4. Hinder new entrants
      3. OBSTACLES
         1. differents costs
         2. differentated products
         3. number of firms
         4. cheating
         5. recession
         6. legal obstacles
            1. collusion is ILLEGAL
      4. CARTEL
         1. coordinate
            1. fixed O
            2. total industry outputs
            3. allocation
            4. customers
            5. territory
            6. market shares
         2. occurs when
            1. small numbers of oligopolists
            2. homogenous products
         3. OUTCOME
            1. increase individual members' profits
            2. very close to monopoly
      5. act TOGETHER rather than COMPETE
   3. PRICE LEADERSHIP MODEL
      1. TACIT COLLUSION
         1. behavious coordination w/o an explicit agreement
      2. DOMINANT FIRM
         1. def
            1. the most efficient, oldest, most respected, largest
            2. other follows
            3. changes the price
      3. OUTCOMES
         1. P doesn't change often
         2. P changes public
         3. P is a barrier to entry
            1. EoS
4. EFFICIENCY
   1. COLLUSION CASE
      1. Productive inefficiency
         1. P > min ATC
      2. Allocative inefficiency
         1. P # MC
   2. POSITIVE COMPETITION
      1. EoS
      2. Competition
         1. improve in product quality
      3. innovative
         1. technology advance