Which oligopoly model was developed to explain price wars in an industry?

Question

Quizplus · Accepted Answer

Game theory was developed to explain price wars in an industry. Game theory applies to any situation where there are a limited number of participants, each of whom has a rational understanding of the strategic interactions among them, and each of whom takes those interactions into account when making decisions. In an oligopoly, this typically means that firms are aware of each other's pricing decisions and adjust their own prices accordingly. Game theory helps to explain why firms in an oligopoly might engage in a price war, even when it is not in their individual best interests to do so.

Which Oligopoly Model Was Developed to Explain Price Wars in an Industry