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Monopolistic competition
Relatively large number of sellers, differentiated products, easy entry/exit
Product differentiation
Variations of particular product
Product differentiation
________ can prevent duplication.
Non-price competition
Product differentiation + advertising
Four firm concentration ratio
Ratio of the output (sales) of the four largest firms in an industry relative to total industry sales
Herfindahl index
Sum of the squared percentage market shares of all firms in the industry
Excess capacity
Plant and equipment that are underused because firms are producing less than the minimum-ATC output
Oligopoly
Market dominated by a few large producers of a homogeneous or differentiated product
Homogeneous oligopoly
Standardized products
Differentiated oligopoly
Differentiated products
Rivals
________ can either match price changes or ignore price changes.
Strategic behavior
Self-interested behavior that takes into account reactions of others
Mutual interdependence
A situation in which each firm’s profit depends not entirely on its own price and sales strategies but also on those of the other firms
Interindustry competition
Competition b/w 2 products associated w/ different industries
Import competition
Competition b/w foreign products
Game theory
Study of how people behave in strategic situations
Collusion
Cooperation w/ rivals rather than work competitively/independently
Kinked demand curve
Demand is highly elastic above the going price P0 but much less elastic or even inelastic below that price
Price war
Successive and continuous rounds of price cuts by rivals as they attempt to maintain their market shares
Cartel
A group of producers that typically creates a formal written agreement specifying how much each member will produce and charge
Price leadership
The dominant firm initiates price changes and all other firms more or less automatically follow the leader
Note 
Flashcard (35)