Chapter 12: Monopoly Flashcards
Monopoly
A market with no competition at all. One firm produces all the output, and charges any price it wishes.
Antitrust
Relating to legislation preventing or controlling trusts/monopolies, with the intention of promoting competition in business
Barriers to Entry
Legal, technological, or market forces that discourage or prevent potential competitors from entering a market
Natural Monopoly
Barriers to entry are something other than legal prohibition
Legal Monopoly
Laws prohibit (or severely limit) competition
What tends to occur when the marginal cost of adding a customer is very low, once the fixed costs of the overall system are in place?
Natural Monopoly
What tends to occur in small local markets for products that are difficult to transport, such as cement?
Natural Monopoly
What tends to occur when a company has control of a scarce physical resource?
Natural Monopoly
What tends to be a characteristic of legal monopolies?
They are considered utilities - products necessary for everyday life - that are socially beneficial to have. Examples are the US Postal Service, electric and water utilities, and garbage.
Patent
Gives inventor exclusive legal right to make, use, or sell an invention for a limited time. This rewards companies for investing in R&D.
Trademark
Identifying symbol or name for a particular good. It can be renewed over and over, as long as it remains in active use.
Copyright
Form of protection for original works of authorship, including literary, dramatic, musical, etc creations
Typical length of a Copyright
Life of author, plus 70 years
Trade Secrets
Secrets a competing firm is not allowed to steal, even if no patent exists
Intellectual Property
Combination of patents, trademarks, copyrights, and trade secret law. Implies ownership over an idea, concept, or image, not a physical piece of property.
