Question

the characteristics of oligopolistic industries include: A few dominant producers. Significant barriers to entry. Identical or differentiated products. Price and non-price competition. How many sellers/firms is a few? How would you define "strategic decision-making?" How does game theory relate to strategic decision-making? This question is based on the oligopolistic industries

Answer 1

Strategic decision making implies that oligopolies often indulge in stiff competition with related to price and other non price factors. The market is more or less unchanged so is existing firm compete for the same market share with others. Decisions regarding how much to produce and what price to be charged are all taken after analysing the possible actions and responses from the rivals.

This inclusion of possible responses from the rival companies defines the strategic decision making. There are different levels of competition described by the cournot, Bertrand, stackelberg, and other forms of market. Game theory helps in analysing this competition. It uses the payoffs available to every firm in the market depending upon the possible actions buy the other firms. By comparing the best possible action of each form given the the possible response from the other, it is able to determine the optimum market equilibrium.