Unit 4: Imperfect Competition

Price Control

Regulations that set the maximum or minimum price a firm can charge for its products.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market.

Product Differentiation

The process of distinguishing a product from others to make it more attractive to a specific target market.

Monopoly

A market structure where a single seller dominates the market and has significant control over prices.

Monopolistic Competition

A market structure characterized by many firms selling similar but not identical products.

Oligopoly

A market structure where a few firms have a large market share and their decisions impact each other.

Natural Monopoly

A market structure where a single firm can supply the entire market at a lower cost than multiple competing firms.

Consumer Surplus

The difference between what consumers are willing to pay and what they actually pay.

Producer Surplus

The difference between what producers are willing to accept and the market price.

Deadweight Loss

Loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved.

Price Discrimination

The strategy of charging different prices to different consumers for the same product.

Nash Equilibrium

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

Collusion

An agreement between firms in a market to restrict competition and increase profit.

Cartel

A group of firms that collude to control prices and limit competition in a market.

Dominant Strategy

A strategy that is best for a player in a game, no matter what the other players choose.

Game Theory

A mathematical framework for analyzing competition among rational decision-makers.