unit 4 terms

<<Antitrust Policy<<

involves efforts by the government to prevent oligopolistic industries from becoming or behaving like monopolies

ex: Rockefeller's Standard Oil

<<Cartel<<

a group of producers that agree to restrict output in order to increase prices and their joint profits

ex: OPEC

<<Collusion<<

when sellers cooperate to raise their joint profits

ex: cartel \n <<Dominant Strategy<<

a players best action regardless of the action taken by the other player

ex: no matter what the firm does, they benefit<<Duopoly<<

an oligopoply consisting of only 2 firms

ex: apple and samsung- phones

<<Excess Capacity<<

when firms in a monopolistically competative industry produce less than the output at which average total cost is minimizes

ex: you order 100 goods, and only sell 75, the excess capacity is 25 goods. \n <<Game theory<<

the study of behavor in situations of interdependence

ex: golden balls game show

<<Interdependent<< when the outcome (profit)of each firm depends on the actions of the other firms in the market

ex: coke and pepsi products

<<Monopolistic Competition<< market structure in which there are many competing firms in an industry, each firm sells a differentiated product, and there is free entry into and exit from the industry in the long run

ex: hair salon

<<Monopoly<< an industry controllled by a monopolist (single firm)

ex: water providers

<<Nash Equilibrium<< the result when each player in a game chooses the action that maximizes his or her payoff, given the actions of the other players, aka noncooperative equilibrium

ex: coke deciding how much cherry coke to produce and the price of it after pepsi had been selling their cherry pepsi

<<Nonprice competition<< when firms that have a tacit understanding not to compete on price use advertising and other means to try to increase their sales

ex: loyalty programs

<<Oligopoly<< an industry with only a small number of firms

ex: oil industry

<<Perfect Price Discrimination<< when a monopolist charges each consumer her or his willingness to pay- the maximum that the consumer is willing to pay

ex: airline industry

<<Price Discrimination<< when firms charge different prices to different consumers for the same good

ex: senior and student prices for tickets

<<Price Regulation<< limits the price that a monopolist is allowed to charge

ex: energy

<<Prisoners Dilemma<< a game based on two premises:

1.) each player has an incentive to choose an action that benefits itself at the other player’s expense

2.) when both players follow this incentive, both are worse off than if they had acted cooperatively

ex: when parents separate kids to ask them what happened to see if they get the same response

<<Public Ownership<<

(of a monopoly) when a good is supplies by the govt, or by a firm owned by the govt. instead of a monopolist

ex: comed

<<Tacit Collusion<<

when firms limit production and raise prices in a way that raises each others profits, even though they habe not made any formal agreement

ex: gas prices