Saturday, April 19, 2008
Are Casinos an Oligopoly?
Do you like to play cards? In the movie 21, a team of MIT students develop a system for beating blackjack in Las Vegas. As the players become known on the strip, they are banned from casinos who refuse their business. The Plymouth Agency distributed a facebook of the card counters with their aliases and disguises to most of the casinos on the strip. Each casino had similar rules and methods of operations. I think the casinos act like an oligopoly. Given that the size of each casino is fixed, it follows that a Cournot pricing model is employed. Information about whales, gorillas, and big players can be shared instantly. I believe there is substantial collusion between casinos to cooperate on prices making the casinos an oligopoly.