Question

Write a 2-3 page paper discussing the two types of competition Monopolies & Game Theory.

Use examples of each that you're encountered.

Answer 1

Market is place where buyers and sellers interact with each others. Monopoly and Game theory are critical forms of market and usually experienced in practical world:

Monopoly:

It is form of market where only single seller exists in market. In such market, firm acts as price takers and there are many sellers in market. There is no close substitute of good.

Main feature of such market is that it tends to introduce the innovation in market in order to maintain the monopoly in market. Although it tends to maximize the profits by limiting the supply of good, it is dynamically efficient.

Monopoly is directly opposite to competitive market. Both are two extreme of straight line.

Electricity and water supply markets are usually characterized by the monopoly features.

Game theory

Game theory forms the part of oligopoly market. Oligopoly market is characterized few sellers say, two to ten. These firms may supply identical or differentiated products.  

In case of game theory, firms tend to compete with each other and sometimes these firms form collusion. Competition among the firms might prove beneficial as price falls and output rises.

Bertrand form of game theory is highly beneficial for public as it tends to produce equal to competitive market. In most of cases, oligopoly market tends to produce more than monopoly market.

Airline competition in USA is perfect example of game theory where firms competes for customers by slashing price and offering varieties of facilities.