Summary by:
Lailatul Marzuqoh (120720140030)

 
Oligopoly is an intermediate form of imperfect competition in which an industry is a dominated by a few firms. One major factor of the imperfect competition is strategic interaction. When only a few firms operate in a market, they will soon recognize their interdependence. They have a choice between cooperative and non cooperative behavior. Firms act non cooperatively when they act on their own without any explicit or implicit agreement with other firms. That’s what produce price wars. Firms operate in a cooperative mode when they try to minimize competition. When firms in an oligopoly actively cooperate with each other, they engage in collusion. This term denotes a situation in which two or more firms jointly set their prices or outputs, divide the market among themselves , or make other business decisions jointly. To maximum the profit, they use strategy called Game Theory. The classic example of the Game Theory is The Dilemma’s Prisoner, which is assume two people arrested and put into different cell. They have two option, to confess or not to confess. The point of this theory is before you make a choice, better you keep in mind what other person gonna do, assume that your opponent will choose his or her best option. Then pick your strategy so as to maximize your benefit, always assuming that your opponent is similarly analyzing your option.

Comic book industry is an oligopoly, which is Marvel has 37% market shares, and DC has 31% market shares. Their product is very similar and they try to find what the customer want and steal an idea from each other. Since the comic book become oligopoly, they have to use Game Theory with Dominant Strategy and Nash Equilibrium. Dominant strategy is used when one player has a single best strategy, no matter what strategy the other player follows, while Nash Equilibrium is a solution in which each player’s strategy is a best response against other player’s strategy.          

References :

Samuelson, Paul A & William D Nordhaus, 2005. Economics. 18th Edition. McGraw Hill.