COMPARATIVE ANALYSIS OF OLIGOPOLY AND MONOPOLISTICCOMPETITION: MARKET STRUCTURES, EQUILIBRIUM MECHANISMS,AND STRATEGIC INTERACTIONS
Keywords:
Oligopoly, Monopolistic Competition, Market Structure, Game Theory, Nash Equilibrium, Barriers to Entry, Product Differentiation, Strategic Behavior, Stackelberg Model.Abstract
This article provides a comprehensive comparative analysis of oligopoly and monopolistic competition, examining their distinct market structures, equilibrium mechanisms, and strategic behaviors. It explores the high interdependence characteristic of oligopolistic markets, analyzing key equilibrium models such as Cournot, Bertrand, and the kinked demand curve. The study further discusses the application of game theory concepts, including the Prisoner’s Dilemma and Nash Equilibrium, to explain firm interactions and strategic barriers to entry, such as predatory pricing and excess capacity. Additionally, the article examines the dynamics ofmonopolistic competition, focusing on product differentiation, Hotelling’s Law of spatial competition, and the role of advertising as a signaling mechanism. By contrasting the strategic "Battle of Giants" in oligopolies with the brand-centric competition of monopolistic markets, the paper highlights the fundamental differences in firm conduct, entry barriers, and long-term profitability.
