value: 10.00 points For each market listed below, determine whether It is best c

Question

value: 10.00 points For each market listed below, determine whether It is best characterized as a Cournot oligopoly, Stackelberg oligopoly, or Bertrand oligopoly. a. Oil production. Each firm produces output independently and the market price is determined by the total amount produced. (Click to select) b. Diamond production. DeBeers is the leader that sets diamond production, and smaller firms follow with their own levels of production. (Click to select) c. Competitive bidding by identical contractors. The contractor bidding the lowest fee wins the contract. (Click to select) (Click to select) Bertrand oligopoly Stackelberg oligopoly oak & Resources Cournot oligopoly

Explanation / Answer

Cournot oligopoly – In the scenario provided is where each firm produces output independently and the market price is determined by the total amount produced of the oil. There are more than one firm and each producing homogeneous product that is oil. Firms do not co operate with each other and the firms compete with each other based on the quantities produced. Stackelberg oligopoly - Debeers act as the leader in the market and since other firm are smaller they monitor the activities of Debeers and follow them. The profit generated on this kind of market is lesser than that made in Cournot model. Bertrand Oligopoly – The interaction between the contractors are based on the quotation considering the cost of production is the same. The contractors compete on the basis of final price that is quoted by all the contractors.

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