Chapter 11 Oligopoly theory The oligopoly theory usually refers to the partial equilibrium study of markets in which the demand side is competitive while the supply side is neither monopolized nor competitive. It is exclusively concerned with single period models. The two models that are mainly discussed are Cournots and a model based on Chamberlin. In Cournots model it is assumed that the products of the firms are perfect substitutes and each firm decides the output levels with price being determined in the market. The Chamberlinian model allows for imperfect substitutability among the outputs of the firms and each firm is assumed to name prices for their products. The chapter also presents some of the basic structure for the models of multi period oligopoly. The time structure of none of these models is explicit; however none of them makes sense when interpreted as strictly single period models. Thus for the best understanding of them it is necessary to augment them by making the time relations explicit and by making an appropriate reformulation of the firms objective functions. The chapter also examines various models in which the time structure is explicit and the firms seek to maximize discounted profit streams. The chapter also discusses models with entry and exit of firms.