Concentrated markets: theory of monopoly Flashcards
Barriers to entry
obstacles that stop new firms entering a market.
X-inefficent
sometimes called organisational slack, not reducing costs to their lowest level- the gap between the actual and lowest possible cost.
`patent laws
a grant of temporary monopoly right over a new product.
Copyright
ownership of rights, for example, to a book, giving redress at law for copying by a third party.
Nationalised
taking a firm into public ownership- ownership by the state.
Incumbent
existing firms in the industry
Limit pricing
setting a price so low that other firms will not enter the industry.
Sunk costs
irretrievable costs that occur when a firm exists an industry.
Legal monopoly
a firm with a 25% pr more of the market share,
Product differentiation
a way of distinguishing a product from that of competitors.
Marginal cost pricing
setting the price at the level of marginal cost.
Average cost pricing
setting the price at the level of average cost.
Dead weight loss
reduction in consumer and producer surplus when output is restricted to less than the optimum level.
First degree price discrimination
when the discriminating firm can charge a separate price to each individual customer.
Price discrimination
where an identical good/service is sold to different customers at different prices for reasons not associated with costs.
