Monopoly, Oligopoly, Monopolistic Competition

These flashcards cover key concepts related to market structures including monopoly, oligopoly, and monopolistic competition, along with definitions essential for understanding their characteristics and economic implications.

Monopoly

A market structure where a single firm is the only producer, having significant market power.

Market Power

The ability of a firm to influence the price of a good or service in the market.

Deadweight Loss (DWL)

The loss of economic efficiency that occurs when an equilibrium for a good or service is not achieved or is not achievable.

Natural Monopoly

A type of monopoly that occurs when a single firm can produce a product at a lower cost than multiple firms due to increasing returns to scale.

Price Discrimination

The practice of selling the same good at different prices to different consumers based on their willingness to pay.

perfect price discrimination

occurs when a seller charges each consumer the maximum price they are willing to pay, capturing all consumer surplus. plus no DWL

2nd and 3rd price discrimination

when a producer charges different prices for different quantities or qualitites of a good or segments a market based on demographics

Regulating monopoly

• increase comp. by breaking up companies

• regulate pricing for natural monopolies

• take. public ownership

• do nothing

Oligopoly

A market structure characterized by a small number of firms, with each firm having some market power.

Game Theory

A mathematical framework used to model strategic interactions between rational decision-makers.

Nash Equilibrium

A situation in a game where no player can benefit by changing their strategy while the other players keep theirs unchanged.

duopoly

a market where there are exactly two firms

Collusion

An agreement among firms in a market to restrict competition, often leading to higher prices and reduced output.

Monopolistic Competition

A market structure in which many firms sell products that are similar but not identical, allowing some degree of market power.

Average Cost (AC)

The total cost of production divided by the number of units produced; it indicates the cost per unit.

Trademark

A legally registered symbol, word, or expression that identifies a product or service.

Copyright

The exclusive legal right to use, reproduce, and distribute original works of authorship.

brands

symbols, logos, or other characteristics that allow one producer’s good to be distinguished from another.

Patent

A property right granted to an inventor for a limited time in exchange for full disclosure of the invention.

imperfect competition

occurs when there is a more than one firm in an industry, but firms have market power.

pooling equilibrium

equilibrium in a signaling game where different types of players send the same signal.

separating equilibrium

equilibrium in a signaling game where distinct types of players send different signals to convey their private information.