L3 MARKET STRUCTURE Flashcards
What is a market?
A market is any place where two or more parties can meet to engage in an economic transaction.
What term is used to describe markets involving illegal transactions?
They are defined as “illicit markets.”
What can transactions involve in a market?
Transactions may involve goods, services, information, currency, or any combination of these.
How does the government regulate legal markets?
The government regulates legal markets by implementing terms and conditions, such as taxes.
What is market power?
Market power is the ability of a firm or group of firms to profitably charge prices above the competitive level.
What are the consequences of having market power?
It allows firms to shut out competitors, charge high prices, and produce low-quality products.
What negative effects can market power have on society?
It can lead to a less fair, less dynamic, and less innovative market environment, reducing economic wealth.
What lawsuit did the United States Department of Justice file against Google?
The lawsuit accused Google of using anticompetitive tactics to maintain and extend its monopolies in search and advertising markets.
How is Google accused of limiting consumer choice?
By prioritizing its own services in search results, making it difficult for users to find competing products or services.
What criticism is directed at Google’s data collection practices?
Critics argue that Google’s data collection is intrusive and collects more user data than necessary without clear consent options.
Why is defining the relevant market important for the government?
It is crucial for tax and competition regulation.
How do businesses benefit from defining the relevant market?
They can set their prices based on the prices of substitutes identified in the relevant market.
What is the benefit for consumers in defining the relevant market?
Consumers enjoy incentives for companies to innovate and an increased number of choices.
What is a key takeaway regarding the monitoring of markets in the digital economy?
It is crucial to carefully monitor niche and dual markets to ensure they are well-defined and appropriately regulated.
What should the government’s role be in new market emergence?
The government should focus on setting up regulations and creating an environment that encourages fair competition.
