Oligopolies have interdependence and strategic interactions which makes game theory a useful tool to make predictions. True False

Absolutely true! Oligopolies are characterized by a small number of firms that must consider both their own actions and the potential reactions of their competitors when making decisions. This interdependence leads to strategic interactions, where game theory becomes an essential tool for understanding pricing strategies, product launches, and advertising campaigns, helping firms predict outcomes based on the strategic choices of others. In real life, you can see oligopolistic behavior in industries like telecommunications or airlines. For example, when one airline decides to lower ticket prices, others often follow suit, leading to a competitive pricing war that can benefit consumers but squeeze profits. Companies use game theory to anticipate and react to these moves, aiming for a state of equilibrium while addressing their long-term strategies.