Game Theory and Oligopoly: Crash Course Economics #26

Would you like to play a game, Dr. Falken? Actually, this episode isn’t really about games, or Matthew Broderick, or Thermonuclear War. But enough with the long references to 1983’s best movie, War Games. Today Jacob and Adriene are going to teach you about Oligopolies, which are kind of like the monopolies that we talked about last week, except with more companies involved. Then we’ll get to the games, or rather, the game theory. Which is all about how companies try to compete with each other in the real world.

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  • 2.15 Yeah… Sure…

    Jakub Wojciechowski July 15, 2020 8:19 am Reply
  • 0.16 Soooo, Monopoly?

    Jakub Wojciechowski July 15, 2020 8:19 am Reply
  • Did anyone else notice the Stan Lee cameo?

    Jessica Jewels July 15, 2020 8:19 am Reply
  • Main Notes:
    1- 4 types of markets
    A- Perfect competition

    Low barriers, identical products, no control over price (eg strawberries)
    B- Monopoly

    There is one large company that produces a product with few substitutes. And because high barriers prevent competition, a monopoly has a lot of control over price.

    C- Monopolistic competition

    a market with many producers and relatively low barriers; their products are very similar but not identical. (eg furniture stores or fast food)
    D- Oligopolies

    markets that have high barriers to entry and are controlled by a few large companies. Similar to monopolistic competition, their products are similar but not identical. That gives them some control over their prices. How?

    2- Non-price competition:
    Companies focus on things like style, quality, location, or service. The goal is to distinguish their product from their competitors.
    The most recognizable form of non-price competition is advertising.

    3- Game theory: the study of strategic decision making.

    4- Collusion: If businesses don’t compete at all and they agree to charge the same high price, conspiring to form what economists call a cartel. They split the customers 50/50, but now they make even more profit — benefiting at the expense of consumers. It’s illegal in the US.

    5- Price leadership is when one company changes its prices, and its competitors have to decide if they’re going to follow suit.

    6- Pay off matrix: In game theory, a payoff matrix is a table in which strategies of one player are listed in rows and those of the other player in columns and the cells show payoffs to each player such that the payoff of the row player is listed first.

    MrRomana3000 July 15, 2020 8:19 am Reply
  • This doesn't sound like Crash Course… they're not talking at break-neck speed

    Nitasha Dewan July 15, 2020 8:19 am Reply
  • 3:20 is he the character from mad men show ?

    Omar ali July 15, 2020 8:19 am Reply
  • Game theory is a YouTube channel

    Danial Mousavi July 15, 2020 8:19 am Reply
  • Her eyes are beautiful…..

    Rravinder Singh July 15, 2020 8:19 am Reply
  • The way Apple convinced so many people its basically equivalent phones (actually less capable, and which admittedly expire forcing you to spend more) are better than Android has always amazed me. That's a good example of differentiating to keep your cost high even though you at many points in time had an inferior product. In this case though I think it has more to do with the competition not being streamlined. One year I'd need the top of the line LG to have something better, the next year I'd need the best Samsung. It was hard to anticipate which would come out on top in the next iteration if you were happy to stick to that OS.

    160p2GHz July 15, 2020 8:19 am Reply
  • Was that the Futurama ship?! <3

    160p2GHz July 15, 2020 8:19 am Reply
  • This 10-minute free video taught me more than my 150$ book and 3 hours of reading. 😔

    A Fernandez July 15, 2020 8:19 am Reply

    R. M. July 15, 2020 8:19 am Reply
  • The video was great until that lame ending. I hope neutral Crash Course will give us "Co-ops and The Economics of Cooperation" someday.

    Erick M July 15, 2020 8:19 am Reply
  • "But if apple raised the price of a phone to 3000 dollars, you might switch to android"

    heh heh

    Yeet Man July 15, 2020 8:19 am Reply
  • 0:13 oh so we're playing monopoly I get it

    Yeet Man July 15, 2020 8:19 am Reply
  • Why does she have a bust of Karl Marx in the background?

    Wyatt Michael Productions July 15, 2020 8:19 am Reply
  • Prisoner's Dilemma explains a lot of things, like why the power blackout last so long, why workers sometimes don't go on strike and other stuff.

    Great video, thanx!

    Luis Ortiz July 15, 2020 8:19 am Reply
  • I love the LSP looking stuffed animals that Plait has on his stand

    Lauren Pecora July 15, 2020 8:19 am Reply
  • "Do you remember the ad that ran before this video?"
    Kek, I had ad block on. There was no ad that played before this video. xD

    Though I understand the concept.

    Kevin Wu July 15, 2020 8:19 am Reply
  • thank you!

    Naomi Rapp July 15, 2020 8:19 am Reply
  • That last pitch for free markets was weak. You explained 100% why the free market cannot exist…because rivals are meant to cooperate & regardless of government oversight find ways to charge consumers more.

    Cody Christie July 15, 2020 8:19 am Reply
  • This is great

    Ali Dbab July 15, 2020 8:19 am Reply
  • Diaper ad.

    THaT_K1D_ZOMB1E July 15, 2020 8:19 am Reply
  • 3:12 Lady: "can you remember the Ad that ran before this video?"
    Me who uses ad blocker: "My goals are beyond your understanding…"

    MANVSMEN July 15, 2020 8:19 am Reply
  • Lowering the price until the competitor will be exhausted is the main route to success. The first will always finished last, and the last will always finished first. The game of business is infinite and will always destroy those who are thinking that business is a finite game. inifinite thinkers: Lose a little and win big later; finite thinkers: we must win no matter what, and disregard what happens after this. You can’t win on finite games in business. Be the offense not the defense.

    ELS Elly July 15, 2020 8:19 am Reply
  • Well, you can collude with the government, pay officials $10 million to allow higher prices, win-win right?

    ray allen July 15, 2020 8:19 am Reply
  • are these two cute hosts a couple?

    Edward Do July 15, 2020 8:19 am Reply
  • When you learn more from a free youtube video than in university.

    VictorARTS July 15, 2020 8:19 am Reply
  • you guys are the best in the world thank you so much for creat this video.

    Juan Jose Logrono July 15, 2020 8:19 am Reply
  • OPEC is a cartel because US and Europe don't have a share in it.

    Rabin upadhaya July 15, 2020 8:19 am Reply
  • When a decript 'hasbeenboomer" says co ops are lame…..turn the channel

    Kavik Runner July 15, 2020 8:19 am Reply
  • What’s it called when insulin is sold for a 6000% markup?

    mustangkraft505 July 15, 2020 8:19 am Reply
  • btw. you got me through university 2 years back. props*

    Your Subconscious July 15, 2020 8:19 am Reply
  • He never blinks.

    Ted Crilly July 15, 2020 8:19 am Reply
  • If there is such thing as a "healthy competition"….

    Yuri Novik July 15, 2020 8:19 am Reply

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