Game theory is especially useful for analysis in the following markets:
A) perfect competition
B) monopolistic competition
C) oligopoly
D) monopoly

Question

Quizplus · Accepted Answer

Game theory is best suited to analyze markets characterized by strategic interdependence, where the actions of one firm affect the actions of others. Oligopoly is a market structure where a small number of firms dominate the market and therefore compete strategically. In this context, game theory can help firms understand how their decisions impact their rivals' choices and vice versa, and how to make strategic decisions to maximize their profits. Perfect competition and monopoly do not involve strategic interactions, while monopolistic competition has only limited strategic interaction, making it less suited to game theory analysis.

Game Theory Is Especially Useful for Analysis in the Following