Mangerial Economics and Business Strategy Chapter 9: Basic
Oligopoly Models
Answer and analyze the
following questions in chapter 9: 6, 14, 15, and 16.
6. Provide a real-world example of
a market that approximates each oligopoly setting, and explain your reasoning.
a. Cournot oligopoly
b. Stackelberg oligopoly
c. Bertrand oligopoly
14. You are the manager of the only
firm that specializes in exporting fish products to Japan.Your firm competes against a handful of Japanese firms that enjoy a significant first-mover advantage.Recently, one of your Japanese customers has
called to inform you that the Japanese legislature is considering imposing a
quota that would reduce the number of pounds of fish products you are permitted
to ship to Japan each year.Your first
instinct is to call a trade representative of your country to lobby against the
import quota.Is following through with
your first instinct necessarily the best decision?Explain.
15. The opening statement on the website of
the Organization of Petroleum Exporting Countries (OPEC) says, “…OPEC’s eleven
numbers are all developing countries whose economies are heavily reliant on oil
export revenues.They therefore seek
stable oil prices that are fair and reasonable for both producers and consumers
of oil.”To achieve this goal, OPEC
attempts to coordinate and unify petroleum policies by raising or lowering the
collective oil production.However,
increased production by Russia, Oman, Mexico, Norway, and other non-OPEC countries has caused the price of crude oil to fall dramatically in recent
years.To achieve its goal of stable and
fair oil prices, what must OPEC do to maintain the price of oil at its desired
level?Do you think this will be easy
for OPEC to do?Explain.
16. Semi-Salt Industries began its operation
in 1975 and remains the only firm in the world that produces and sell
commercial-grade polyglutamate.While
virtually anyone with a degree in college Chemistry could replicate the firms
formula, due to the relatively high cost, Semi-Salt has decided not to apply
for a patent.Despite the absence of
patent protection, Semi-Salt has averaged accounting profits of 5.5% on
investment since it began producing polyglutamate—a rate comparable to the
average rate of interest that large banks paid on deposits over this
period.Do you think Semi-Salt is
earning monopoly profits?Why?