A/ ASSIGNMENT RECAP

● Market Analysis: Conduct a detailed study of the assigned oligopolistic market using game theory to identify major players and their strategies, analyze firm behavior, and evaluate the market's impact on consumer and social welfare.

● Market Numerical Exercise: Simulate the market dynamics by creating a simplified model, role-playing as a firm to apply strategic decisions, and test the formulated hypotheses against real-world scenarios.

● Policy Implications: Develop well-reasoned, data-supported policy interventions aimed at improving social welfare based on the analytical findings from the market study.

Suggested Structure:

Introduction (150 words)

Market Analysis (800 words):

●  Identification of Major Players (130 words)

●  Firm Behavior Analysis (205 words)

●  Market Structure Identification (130 words)

●  Market Power and Welfare (205 words)

●  Hypothesis Formulation (130 words)

Market Numerical Exercise (600 words)

●  Simulation Parameters (150 words)

●  Role Assignment and Strategic Decisions (200 words)

●  Testing Hypotheses (150 words)

●  Reflection on Outcomes (100 words)

Policy Implications (400 words)

Conclusion (50 words)

B/ KEYWORD EXPLANATIONS

1.                   Oligopolistic Markets

An oligopolistic market is a market structure characterized by a small number of firms that have significant market power. In such markets, each firm's decisions regarding prices, output, and strategies significantly impact the market. In oligopolies, firms are interdependent, meaning the actions of one firm influence the others. This can lead to strategic behaviors like price-fixing, collusion, and non-price competition.

2.                   Game Theory

Game theory is a framework for understanding strategic interactions among rational decision-makers. It is used to analyze situations where the outcome for each participant depends on the actions of all.

3.                   Nash Equilibrium:

Nash Equilibrium is a concept within game theory where no player can benefit by changing their strategy while the other players keep theirs unchanged.It represents a situation of mutual best responses in a game. In oligopolistic markets, it helps in understanding the stable state where each firm chooses the best strategy, given the strategies chosen by other firms.

4.                   Cournot Competition

Cournot competition is a model of an oligopoly where firms compete on the quantity of output they decide to produce. In the Cournot model, each firm assumes that its competitors will hold their output constant and then adjusts its own output to maximize profit.

Profit maximization typically involves setting marginal revenue equal to marginal cost.

5.                   Consumer Welfare

Consumer welfare refers to the overall well-being and satisfaction of consumers in terms of utility derived from goods and services. It is often associated with concepts like consumer surplus, which is the difference between what consumers are willing to pay and what they actually pay.

6.                   Market Power

 Market power is the ability of a firm (or group of firms) to raise and maintain prices above the level that would prevail under competition.

7.                   Bertrand competition

Bertrand competition is an economic model where firms compete on price rather than quantity. Each firm assumes that its competitors will hold their prices constant, and then sets its price to maximize profit. This often leads to a price equal to marginal cost, the minimal sustainable price.

D/ DETAILED OUTLINE

           I.     Introduction (100 words)

-   Briefly introduce oligopolistic markets.

-   Outline the purpose and scope of your analysis.

-   Mention the assigned market and the scope of your market based on your student number and briefly explain why it is categorized as monopolistic market.

Example:

-   Oligopolistic markets, characterized by a small number of firms holding substantial market share, present unique challenges and opportunities for analysis. These markets, unlike perfectly competitive ones, are marked by a strong interdependence among firms, leading to strategic behaviors that significantly impact market dynamics.

-   This report will look closely at how companies in an oligopoly behave and make decisions, using ideas from economics and game theory. Additionally,  emphasizing practical application, a simulated scenario will test theoretical concepts in a real-world context

-   Based on the last digits of my student number (e.g., 34), my focus will be on the Banking and Financial Services sector within Vietnam. Vietnam's Banking and Financial Services market is oligopolistic due to the presence of a few dominant banks that exert significant control over market prices, services, and overall market dynamics.