Market structure Flashcards
Barriers to entry
factors which make it difficult or impossible for firms to enter an industry and compete with existing producers
Barriers to exit
factors which make it difficult or impossible for firms to cease production and leave an industry
Brand
a name, design, symbol or other feature which distinguishes a product from others
Concentration ratio
the market share of the largest firms in an industry
Homogeneous goods
goods made by different firms but are identical
Imperfect competition
a market structure where there are several or a relatively large number of firms in the industry, each of which has the ability to control the price that it sets for its producers
Limit pricing
when a firm, rather than short run profit maximising, sets a low enough price to deter new entrants from coming into the market
Market concentration
the degree to which the output of an industry is dominated by its largest producers
Market share
the proportion of sales in a market taken by a firm or a group of firms
Market structure
the characteristics of a market which determine the behaviour of firms within the market
Natural monopoly
where economies of scale are so large relative to market demand that the dominant producer in the industry will always enjoy lower costs of production than any other potential competitor
Non-homogeneous goods
goods which are similar but not identical made by different firms such as branded goods
Perfect knowledge or information
exists if all buyers in a market are fully informed of prices and quantities for sale, whilst producers have equal access to information about production techniques
Sunk costs
costs of production which are not recoverable if a firm leaves the industry
