me as would have been under monopoly. Thus the explicit or co-operative collusion or Cartel would take place. Second approach of the oligopoly analysis is based on the assumption that firms do not co-operate, but make their decisions on the basis of guesses, expectations, about the variables to which their competitors are reaching and about the form and the nature of the reactions in question. The Non-collusive behaviour deals with this model. Here, though in equilibrium the expectations of each firm about the reactions of rivals are realised, the parties never actually communicate directly with each other about their likely reactions. The extreme case of this can even imply competitive behaviour. Such a situation is much less profitable for firms than the one in which they share the monopolistic profit. The purpose of this paper is to analyse the case of the possibility of collusion between firms in order to reach the monopolistic profits for the industry, assuming that they do not co-operate with each other. This would be the most interesting and ambiguous case to look at. 3. Game theory.a.) Concept. The notion of game theory would a good starting point in the study of strategic competition and would be very helpful in realising the model and the problems facing oligopolistic firms associated with it. Game theory provides a framework for analysing situations on which there is interdependence between agents in the sense that the decisions of one agent affect the other agents. This theory was developed by von Neumann and Morgenstern and describes the situation, which is rather like that found in the children's game "Scissors&Stones". Each firm is trying to second-guess the others, i.e. the behaviour of one firm depends on what it expects the others to do, and the in turn are making their decisions based upon their expectations of what the rivals (including the first firm) will do. In our case, the players of the game are the firm...
