In the 1930's, it began to seem that the problem was that oligopoly pricing decisions are strategic decisions. That isn't so for P-competition. P-competitive firms don't decide on a price -- they just decide how much to sell at the price determined by supply and demand. Nor are monopoly pricing decisions strategic, at least in the same sense. Since the monopoly has (by definition) no rivals, it does not have to consider how its rivals will respond to its decision. But that's the essence of a strategic decision, and oligopolists' decisions are strategic in that sense: they have to consider the reactions of their rivals (one another).
The difficulty of resolving the question of strategic price decisions within traditional microeonomic theory led some economists, around 1940, to consider a new theory of strategic decisions that was being developed by the great mathematician John von Neumann. It was called Game Theory. Over the years, game theory has become increasingly important as an approach to microeconomic questions in general -- not just in oligopoly pricing. Accordingly, we will now go on to a quick survey of game theory, before concluding this chapter.
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