Chapter 22-26 (inclusive) Flashcards
Barriers to entry
obstacles that might discourage a firm from entering a market
Competition
the rivalry that exists between firms when trying to sell gods to the same group of customers
Innovation
the commercial exploitation of a new invention
Product differentiation
an attempt by a firm to distinguish is product from that of rival
Backward vertical integration
merging with a firm that operates in the previous stage of production
Conglomerate or diversifying merger
the merging of firms involved in completely different business activities
Forward vertical integration
merging with a firm that operates in the next stage of production
Horizontal integration
the merging with a firm that operates in the next stage of production
Lateral integration
the merging of two firms that produce similar goods but are not in competition with each other
Merger
the joining together of two or more business- usually to make one new one
Organic growth
growth achieved through the expansion of current business activities
Takeover
the purchase of one business by another
Vertical integration
merging with a firm that operates in a different stage of production
Monopoly
a situation where there is one dominant seller in a market
Natural monopoly
a situation that occurs when one firm in an industry can serve the entire market at a lower cost than would be possible if the industry were composed of many smaller firms
Patent
a license which grants permission to operate as a sole producer of a newly designed product
Cartel
where a group of firms or countries join together and agree on pricing or output levels in the market
Collusion
informal agreements between firms to restrict competition
Interdependence
where the actions of one large firm in an oligopolistic market will have a direct effect on others
Niche
a small section in a large market
Oligopoly
a market dominated by a few large firms
Price wars
where one firm in the industry reduces price causing others to do the same
