 jmn1207Premium
join:2000-07-19
Ashburn, VA | reply to beaups
Theory of Oligopoly While this study about the New Brunswick gasoline industry is over a decade old, it fundamentally pertains to most oligopolies, of which both our own gasoline industry and our wireless service options would be included.
»findarticles.com/p/articles/mi_h···ent;col1
"This study develops a model that explains how a cooperative solution can be sustained in an oligopolistic industry, (namely New Brunswick's gasoline industry) despite the inherently noncooperative strategies of the players, who are resolved to maximizing their individual (rather than joint) profits."
Excerpts from the conclusion....
"There is a tendency toward cooperative market behaviour among oligopolist competitors because each has foresight, and correctly expects rivals to have similar foresight of its own strategic moves. Oligopoly firms are therefore less likely to adopt aggressive strategies that thereby lead to accelerated competition that might jeopardize chances of higher profits. However, if firms believe that rivals are less than perfectly rational (and such a belief turns out to be right), then they may resort to aggressive postures that result in noncooperative strategies and quasi-competitive outcomes of the usual Cournot solution.
Applied to the gasoline industry in New Brunswick, it is seen that the model adequately reflects the pattern of price setting and rival interactions among the oligopolist firms that are involved in the industry: each firm adopting a strategy that results in a cooperative solution in an otherwise inherently noncooperative game setting. The empirical analysis seems to bear evidence of a general tendency for price fixing at best, and outright tacit collusion at worse."
Our own government appears to be hopelessly rooted in the conglomerate garden. At this point, I believe the Federal Trade Commission is useless and completely under the control of the world's largest corporations operating within our borders. Unless a company becomes careless and politically polarized, there is no reason to believe that we will not continue to see similar trends in all major industries, if they don't already exist. |
beaups
join:2003-08-11
Hilliard, OH | Nice article, and my point to a degree. What is the solution? I just can't see any business that would be in a hurry to slash prices only to watch their competitors do the same...with no gain to either. Why would they?? |
