Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

participants in this type of market, each oligopolist is aware of the 
actions of the others. 
2. An Oligopolist faces a downward sloping demand curve; 
however; the price elasticity depends on the rivals reaction to 
change its price, investment and output. 
3. OPEC is an example of Oligopoly since few countries control the 
production of oil. OPEC acts as a cartel. If OPEC and other oil 
exporters did not compete, they could ensure much higher prices 
for prices for everyone. 
4. 
The kinked demand curve, used by Paul Sweezy, explained the observed 
rigidity of price in an oligopoly market. 
5. The demand curve faced by any individual seller has a kink at the initial 
price-quantity combination. The kinked shape of the demand curve is based on 
the assumption that the competitors react differently to a rise in price or to a fall 
in price. 
1.5 QUESTIONS 
1. Explain oligopoly market in detail. 
2. Explain Cournot‘s model. Give its significance. 
3. Critically examine the Co
urnot‘s model. 
4. Discuss in detail the concept of Kinked demand curve. 
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2 
 
 
COLLUSION: CARTELS AND PRICE 
LEADERSHIP 
 
Unit structure 
 
2.0 Objectives 
2.1 Introduction 
2.2 Price leadership 
2.3 The Theory of Games 
2.4 
Game theory:
Nash Equilibrium
2.5 What should Nigel and Amanda do? 
2.6 Summary 
2.7 Questions 
 
2.0 OBJECTIVES 
 
To study the concept Collusion. 
To study the meaning of price leadership and its different 
forms. 
To study the meaning and definitions of Theory of Games. 
To study Nash equilibrium and Prisoner‘s dilemma.