Chapter 8 - pt 2

Question 1

competition policy

Answer 1

Policy governing the rules of the game in competition, which determines the institutional mix of competition and cooperation that gives rise to the market system

Question 2

antitrust policy

Answer 2

Competition policy designed to combat monopolies, cartels, and trusts

Question 3

collusive price setting

Answer 3

Monopolists or collusion parties set prices at a level higher than the competitive level

Question 4

predatory pricing

Answer 4

(1) Setting prices below costs in the short run to destroy rivals
(2) intending to raise prices to cover losses in the long run after eliminating rivals

Question 5

dumping

Answer 5

An exporter selling below-cost abroad and planning to raise prices after eliminating local rivals

Question 6

antidumping law

Answer 6

A law that punishes foreign companies that engage in dumping in a domestic market

Question 7

attack

Answer 7

An initial set of actions to gain a competitive advantage

Question 8

counterattack

Answer 8

A set of actions in response to attacks

Question 9

thrust

Answer 9

The classic frontal attack with brute force

Question 10

feint

Answer 10

A firm’s attack on a focal arena is important to a competitor, but not the attacker’s true target area

Question 11

gambit

Answer 11

A firm’s withdrawal from a low-value market attracts rival firms to divert resources into the low-value market so that the original withdrawing firm can capture a high-value market

Question 12

Awareness-Motivation-Capability (AMC) framework

Answer 12

A competitive dynamics framework suggests that a competitor will not be able to respond to an action unless it is aware of the action, motivated to react, and capable of responding

Question 13

market power

Answer 13

Ability to raise prices without the fear of losing customers