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Game Theory and its Application to Oligopolistic market

  • Unique Paper ID: 164876
  • Volume: 10
  • Issue: 12
  • PageNo: 2674-2678
  • Abstract:
  • In the real-world situations, each economic operator faces the rivalries competition by the reaction of his rivals. Hence his decision making depends not only on his own choices but also on the choices of the others. To select an optimal strategy, in the oligopolistic market, decision makers can use game theory. An important contribution in the development of methods for economic analysis has been made by Von Neumann and Oscar Morgenstern which is known as the game theory. Game theory is a mathematical theory that is used for analysis and solving of conflict situations, in which participants have opposite interests. The concepts of game theory provide a tool for formulating, analyzing, and understanding different strategies. It attempts to address the functional relationship between the selected strategies of individual players and their market outcome, which may be either profit or loss. The game theory has been applied to the analysis of market situations in which the outcome depends upon the actions of participants with conflicting interests such as duopoly, bilateral monopoly, and oligopoly. In this paper try to show how the key aspects of game theory can be used to the equilibrium analysis of Oligopolistic market and explain how an individual firm decides to cheat on a cartel agreement.
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  • ISSN: 2349-6002
  • Volume: 10
  • Issue: 12
  • PageNo: 2674-2678

Game Theory and its Application to Oligopolistic market

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