When oligopolistic firms interacting with one another,each choose their best strategy given the strategies chosen by other firms in the market,what do we have
A)a cartel
B)a socially optimal outcome
C)a Nash equilibrium
D)a collusion

Question

Quizplus · Accepted Answer

When oligopolistic firms interact with one another and each choose their best strategy given the strategies chosen by other firms in the market, we have a Nash equilibrium. This means that no firm can improve their outcome by unilaterally changing their strategy. The firms are locked into a stable set of choices, even though the outcome may not be socially optimal. A cartel or collusion occurs when the firms explicitly agree to cooperate and coordinate their actions, which is not necessarily the case in a Nash equilibrium.

When Oligopolistic Firms Interacting with One Another,each Choose Their Best