Why do economists use game theory to study the actions of firms in oligopoly markets but not in other markets?
In oligopoly markets, there are a few firms whose actions are interdependent. Hence, oligopolists have strategies that economics can model using game theory. Only one firm exists in a monopoly, so there are no interdependent actions of firms. In perfect competition and monopolistic competition, there are so many firms that each firm is too small for its actions to affect other firms in the market.
Economics
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