4 - concentrated markets: theory of monopoly Flashcards
obstacles that stop new firms entering a market
barriers to entry
the gap between the actual and lowest possible cost (not reducing the costs to their lowest level)
x-inefficient
a grant of temporary monopoly rights over a new product
patent laws
ownership of rights, e.g a book, giving redress at law for copying a third party
copyright
taking a firm/industry into public ownership - ownership by the state
nationalised
setting a price so low that other firms will not enter the industry
limit pricing
irretrievable costs that occur when a firm exits an industry
sunk costs
a firm with 25% or more market share
legal monopoly
a way of distinguishing a product from that of competitors
product differentiation
setting the price at the level of marginal cost
marginal cost pricing
setting the price at the level of average cost
average cost pricing
reduction in consumer and producer surplus when output is restricted to less than the optimum level
dead-weight loss
where an identical good/service is sold to different customers at different prices for reasons not associated with costs
price discrimination
when the discriminating firm can charge a separate price to each individual customer
first degree price discrimination
when the discriminating firm can charge a separate price to different customer groups
second degree price discrimination