Changes outside the business but inside the industry which lower unit cost; e.g. New transport network
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3 properties of Dis-EOS
Communication, co-operation + co-ordination
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Short Run showdown point?
Firms will shut down when AVC>AR because every additional unit sold will add to losses.
9 of 25
Perfect Comp. characteristics?
HALFPPP; Homo. products // Acess to all factors of prod. // Large no. of buyers/sellers // Free Entry + Exit // Perfectly Elastic PED // Profit max // Perfect info
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Monopolistic market characteristics?
Perfect comp. with product differentiation + inelastic PED's
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Oligopoly characteristics?
Top 5 firms = 60% market share, product branding, High barriers to entry/exit, Non-price comp. + Inter-dependant decisions
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Types of collusion (oligopoly)?
Overt and tacit
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Firm behaviour in game theory?
Nash Equilibrium = best strategy knowing the other persons choice // Dominant Strategy = best strategy regardless of other persons choice
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Monopoly Characteristics?
High barriers to entry/exit, Low levels of comp, X-inefficient + lots of intervention
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Third degree price discrimination?
Monopolies charge different groups of customer different prices for the same product; e.g. discounted rail fares for students
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What is a monopsony?
A single buyer within a market; e.g. government dominates market for hiring teachers
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Costs + Benefits of a monopsony?
Costs - Monopsonist could drive supplier out of business, Exploitation of power to push prices down // Benefit - Lower prices for consumers, larger supernormal profit for firms
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Properties of Contestability?
No sunk costs, No barriers to enter/exit, low levels of brand loyalty + access to same tech.
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Labour market failure?
Occupational and Geographical immobility
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Labour immobility solutions?
Training programmes(apprenticeships) and relocation subsidies
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