Competing with substitutes Flashcards
1
Q
Concentration ratio
A
Aggregate market share of 4 largest firms in relation to industry as whole
2
Q
Pure price competition
A
Firms continue to undercut each other until price = marginal cost
3
Q
Conditions for sustaining collusion:
A
- Firms compete repeatedly
- Long term horizon
- Small number firms
- High value placed on future profits (vs present)
- Punishments breaking collusion
4
Q
To outperform competitors must innovate:
A
The production process
Design of the product
Within the environment
5
Q
A
