is the characterisitic of a market which determine the behaviour of firms within the market
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Homogenous
exactly the same
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Natural Monopoly
a single seller in the market or industry. Note the competition Commission criteria is any firm with over 25% market share
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The Concentration Ratio
is the market share of the largest (specified) number of firms in a industry
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Price Discrimination
Where a firm charges different prices to different customers, even though the cost of each unit to the firm is the same
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Price Differentiation
Not to be confused with price discrimination. price diffferentiation is where the price charged to different consumers can differ, but only because the cost of production differs too
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Collusion
Where firms agree not to compete on price. Can be Covert, Overt or Tacit
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Cartel
A group of companies or countries which collectively attempt to affect market prices by controlling production and marketing E.G. OPEC
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Non-price competition
a feature of oligopoly E.G. advertising, quality and after sales service
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Kinked demand curve model
this is the model of oligopoly that suggests price stability. Demand is elastic above the kink and inelastic below the kink
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Zero Sum Game
Where one players gain is matched by the other players loss
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Dominant Strategy
Where a single strategy is better for both players
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Nash equilibrium
is a point where neither player can improve their position given the choice of the other player
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Maximum strategy
Where firms try to minimise their risk, whilst maximising profits by choosing the strategy with the best 'worst case' payout
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Predatory pricing
A pricing strategy used by firms to force competitors to leave the market
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Contestable markets
Where there are no barriers to entry or exit so behaviour of firms tries to discourage new entrants
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Static Efficiency
Exists at one point in time
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Dynamic Efficiency
Looks at resource use over time
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Other cards in this set
Card 2
Front
exactly the same
Back
Homogenous
Card 3
Front
a single seller in the market or industry. Note the competition Commission criteria is any firm with over 25% market share
Back
Card 4
Front
is the market share of the largest (specified) number of firms in a industry
Back
Card 5
Front
Where a firm charges different prices to different customers, even though the cost of each unit to the firm is the same
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