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Intermediate Microeconomics - II Bnhrcc410T B.A. 4 Semester: Paper Name: Paper Code
Intermediate Microeconomics - II Bnhrcc410T B.A. 4 Semester: Paper Name: Paper Code
Intermediate Microeconomics - II Bnhrcc410T B.A. 4 Semester: Paper Name: Paper Code
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 1
II_BA4thsemester
Course Outline
1. Market Structure and Game Theory: Monopolistic competition; Game theory and
oligopoly.
3. Market Failure : Externality and solution – Pigouvian taxation and subsidy, Coase
solution; Public goods and markets with asymmetric information.
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 2
II_BA4thsemester
Reading / Reference Lists
1. Hal R. Varian, Intermediate Microeconomics, a Modern Approach ,8thedition, W.W. Norton and
Company, Affiliated East-West Press (India), 2010.
2. C. Snyder and W. Nicholson, Fundamentals of Microeconomics , CengageLearning(India), 2010.
3. David M. Kreps, A Course in Microeconomics, Princeton University Press, 1992
4. Jean Tirole, Theory of Industrial Organization, MITPress, 1988.
5. Robert Gibbons, A Primer in Game Theory, Princeton University Press, 1992.
6. Erik Rasmusen, Games and Information: An Introduction to Game Theory, Basil Blackwell, 1999.
7. K.Binmore, Fun and Games: A Text on Game Theory, Oxford University Press, 1991.
8. Anindya Sen, Microeconomics:Theory and Applications, Oxford University Press, 1999.
9. Pindyck and Rubinfeld, Microeconomics, 8th Edition, Pearson Education, 2017
10. Hal R. Varian, Microeconomic Analysis, 3rd edition, W.W. Norton and Company, 1992
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 3
II_BA4thsemester
Market Structure
and
Game Theory
(Part 1)
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 4
II_BA4thsemester
Types of Characteristics of the Market
Market No. of Firms Nature of the Entry Barriers
Product Produced
Perfectly Many Identical products Free entry
Competitive
Monopoly One Identical products Barriers to entry
Oligopoly Few Identical products Barriers to entry
(Homogeneous
products oligopoly)
Few Differentiated products Barriers to entry
(Differentiated
products oligopoly)
Monopolistic Many Differentiated products Free entry
competition
SrijitaGhosh_Intermediate Microeconomics –
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II_BA4thsemester
Oligopoly Market Structure
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 6
II_BA4thsemester
Oligopoly Market- Characteristics
SrijitaGhosh_Intermediate Microeconomics –
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II_BA4thsemester
Oligopoly Market
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 8
II_BA4thsemester
Oligopoly Market
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 9
II_BA4thsemester
Oligopoly Market with Identical Products
Choosing a Strategy
• If there are two firms in the market and they are producing a
homogeneous product, then there are four variables of interest.
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 10
II_BA4thsemester
Oligopoly Market
They are-
1. Simultaneous game
2. Sequential game
3. Cooperative game
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 11
II_BA4thsemester
Simultaneous game
• When one firm makes its choices regarding price or quantity, it doesn’t
know the choices made by the other firm.
• In this case, it has to guess about the other firm’s choice in order to
make a sensible decision itself.
• When one firm decides about its choices for prices and quantities it
may already know the choices made by the other firm.
• If one firm gets to set its price before the other firm, we call it the
price leader and the other firm the price follower.
• Similarly, one firm may get to choose its quantity first, in which case it
is a quantity leader and the other is a quantity follower.
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 13
II_BA4thsemester
Cooperative game
• Two firms can jointly agree to set prices and quantities that
maximize the sum of their profits instead of competing
against each other.
SrijitaGhosh_Intermediate Microeconomics –
01/18/2022 14
II_BA4thsemester