Theme 4 - Oligopoly

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  • Created by: becky.65
  • Created on: 11-01-18 18:58
What do concentration ratios provide us with?
Vital detail on on oligopolies and the strength of their market power
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What does the concentration ratio measure?
The extent to which a market or industry is dominated by a few leading firms. It is calculated by adding the market shares of the biggest firms in the industry
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How are big supermarkets interdependent?
They watch each others' prices all the time and there is competition on many aspects, however they are reluctant to start a price war as profits would suffer so they tend to compete on advertising and location
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What is tacit agreement?
The understanding that develops between competing businesses. There is no personal agreement but they take no action to increase competition and stick to non-price competition
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What is a price maker?
A seller with significant market share; if one businesses raises its prices the others will follow thus maintaining price stability
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What is price discrimination?
Within markets, there will be segments will differing price elasticities of demand. Big organisations can increase revenue by charging higher prices for a segment with low PED and giving discounts for groups with high PED
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What are the key factors of price discrimination?
It must be easy to identify particular groups or consumers and to prevent people who can buy at a lower price from making a profit by selling on to those who are charged more
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Other cards in this set

Card 2

Front

What does the concentration ratio measure?

Back

The extent to which a market or industry is dominated by a few leading firms. It is calculated by adding the market shares of the biggest firms in the industry

Card 3

Front

How are big supermarkets interdependent?

Back

Preview of the front of card 3

Card 4

Front

What is tacit agreement?

Back

Preview of the front of card 4

Card 5

Front

What is a price maker?

Back

Preview of the front of card 5
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