Where a few large firms have the majority of the market share
Oligopoly
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The proportion of the market share held by the dominant firms
Concentration Ratio
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Setting a price that may bankrupt a competitor firm in order to try and take it over
Predatory Pricing
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Combining with other firms
Integration
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Where actions by one firm will have an effect on the sales and revenue of other large firms in the market
Interdependent
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Where firms competitively lower prices to increase their market share
Price War
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The action taken by firms in response to a change in behaviour of a competitor
Reactive Behaviour
7 of 20
A theoretical approach that endeavors to analyse the reasons for price stability in oligoplies
Kinked Demand Curve
8 of 20
A measure indicating the degree to which consumers will purchase a firms product rather than a competing firms product
Brand Loyalty
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Region over which a change in marginal costs will not lead to a change in the firms price and output levels
Discontinuous Marginal Revenue Curve
10 of 20
An analysis of how game players react to changing circumstances and plan their response
Game Theory
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Where a gain by one player is matched by a loss by another player
Zero Sum Game
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Where one party does not take any action that might promote retaliatory action by another party
Risk Adverse
13 of 20
Firms communicate with one another. They decide to set prices or carve a market up between them. This is referred to as a cartel. This is illegal. (Where firms cooperate in their pricing and output policies.)
Collusion
14 of 20
Where prisoners both choose the worst option
Prisoners' Dilemma
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(Informal Collusion) - Follows the market leader in relation to price setting for example. This is legal
Tacit Collusion
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No market pressure for firms to become efficient. Costs are not reduced to their lowest possible level. Higher costs are passed onto the consumer.
X-Inefficient
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The market would become less efficient with the introduction of competition. E.G. infrastructure is set up in a manner that only only firm can viably access it.
Natural Monopoly
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This is when a monopoly sells every unit of output at a different price to consumers e.g. insurance, bespoke products, art etc.
Price Discrimination - First Degree
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This is when a firm sells products at different prices to groups of consumers e.g. adult, child, OAP, students, off/on peak. Cinema, trains and buses.
Price Discrimination - Second Degree
20 of 20
Other cards in this set
Card 2
Front
Concentration Ratio
Back
The proportion of the market share held by the dominant firms
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