Game theory means studying the oligopolistic behaviour of a series of strategic actions of a firm and reaction of the rival firm according to this theory cartels are unstable, due to the behaviour of members of a cartel is like the behaviour of a player who has a dominant strategy in a game. Game theory concepts have become hugely important in economics and whilst there are limits to how far analysis can stretch, making use of some of the core ideas can add greatly to your evaluation and analysis marks in the summer papers.
In this essay i will discuss the similarities and differences of two of the largest growers and sellers in the drug trade: the cali cartel of columbia and the tijuana cartel of mexico the cali cartel is the largest, richest, and most complex producers and distributors of cocaine.
A cartel is defined as a group of firms that gets together to make output and price decisions the conditions that give rise to an oligopolistic market are also conducive to the formation of a cartel in particular, cartels tend to arise in markets where there are few firms and each firm has a significant share of the market. This free miscellaneous essay on essay: theory functions as a labor cartel is perfect for miscellaneous students to use as an example.
Cartel operations are always known to be short lived the ever present incentive to cheat amongst the members of a cartel has always lead to withdrawal for firms, and eventually disbanding the cartel individual firms or oligopolist, in collusion will always have desire to cut down price or sell more than what the cartel has agreed.
A cartel is defined as a group of firms that gets together to make output and price decisions (cartel theory of oligopoly, nd) [tags: precious gem stones, synthetic diamonds] strong essays 1180 words | (34 pages) | preview. 2) sanctions the ability of a cartel to impose effective sanctions if cheating does occur is another important determinant of cartel stability the firms submit their bids secretly the ability of a cartel to discipline its own members for breaches of agreement is essential.
When can game theory be used to good effect in a level economics essays you would normally use game theory at a2 level when discussing the market structure of oligopoly applying game theory in economics essays levels: as, a level exam boards: aqa, edexcel, ocr, ib price fixing in a cartel student videos oligopoly: evaluating.
Oligopoly: cartel and output essay briefly outline some of the main models of oligopoly in which firms compete according to output hence, discuss the contention that non-collusion is the inevitable outcome of oligopoly.