topic 4 competitive and concentrated markets

artifical barriers to entry

barriers to market entry that are man made

collusion

illegal cooperation between multiple firms forming a cartel

concentrated market

a market with very few firms

concentration ratio

the total market share of the leading firms in an industry

barrier to entry

makes it impossible/more difficult to enter a market

barrier to exit

make it impossible/more difficult for firms to exit a market

imperfect competition

any market structure between the extremes of perfect competition and a pure monopoly

innovation

improving upon an existing product or process

invention

creation of a new product or process

limit pricing

lowering the price of a good or service to around average cost creating an artifical barrier to entry

market share maximisation

when a firm maximises their percentage share of the market in which it sells its product

market structure

the characteristics of a market

monopoly power

the ability of a firm to be a price maker rather than a price taker the ability to set prices.

natural barrier to entry

barriers to market entry that are not man made

natural monopoly

when the ideal number of firms in an industry is 1

oligopoly

A market dominated by a few firms

patent

Goverment legislation protecting a firms right to be the sole producer of a good

predatory pricing

temporarily lowering a goods price below average cost creating an artifical barrier to entry

price competition

reducing the price of a product thus stripping demand from competitors

price maker

A firm with monopoly power and therefore the ability to set prices

price taker

A firm that passively accepts the market price set by forces beyond the firms control

product differentiation

differences between multiple similar goods and services

profit maximisation

occurs where the positive difference between total revenue and total costs is at its highest

pure monopoly

only one firm in a market

sales maximisation

when sales revenue is at its highest