In a perfectly competitive market, firms are small relative to the overall market and have no control over the market price. They must accept the price determined by the forces of supply and demand.

A natural monopoly exists when a single firm can produce a good or service at a lower cost than multiple firms. This is often due to high economies of scale, where the average cost of production decreases as output increases.

A Nash equilibrium is a set of strategies, one for each player, such that no player can unilaterally improve their payoff by changing their strategy while the other players keep their strategies unchanged.

Penetration pricing is a strategy where a firm sets a price below the marginal cost to quickly gain market share and establish a dominant position in the market.

In a Cournot duopoly model, firms compete by setting their quantities simultaneously and independently, taking the output of the other firm as given.

Externalities are a type of market failure that occurs when the actions of one economic agent affect the well-being of another economic agent without compensation.

The Herfindahl-Hirschman Index (HHI) is a measure of market concentration that is calculated by summing the squared market shares of all firms in the market.

In a Bertrand duopoly model, firms compete by setting their prices simultaneously and independently, taking the price of the other firm as given.

Price skimming is a strategy where a firm sets a price above the marginal cost to capture the willingness to pay of early adopters and generate high profits.

A dominant strategy is a strategy that guarantees a higher payoff than any other strategy, regardless of the strategies of the other players.

A duopoly is a type of oligopoly where there are only two firms in the market.

The kinked demand curve model is used to explain price rigidity in oligopolistic markets, where firms are reluctant to change their prices due to the fear of retaliation from their competitors.

A Nash equilibrium is a type of game theory equilibrium where each player's strategy is a best response to the strategies of the other players.

A Pareto efficient outcome is one where no player can be made better off without making another player worse off.