Market structure and definition and competitor identification Flashcards
In technological progress, what are the supply conditions?
- Technology and cost structure
- Factor markets
- Organizational structure location
In technological progress, what are the demand conditions?
- Tastes and preferences
- PeD
- Availability of substitutes
- Method of purchase
In technological progress, what are the structure conditions?
- Number and size
- Distribution of buyers and sellers
In technological progress, what are the conduct conditions?
- Business objectives
- Pricing policies
- Product design/branding
- Ads/marketing
In technological progress, what are the performance conditions?
- Profitability
- Growth
- Quality of products/service
What are categories of government policy?
- Competition policy
- Regulation
- Taxes and subsidy
- Employment and wage policy
- Price controls
Markets are often described by the degree of:
Concentration
What are the two market extremes?
Monopoly and perfect competition
What are the characteristics of an imperfectly competitive firm?
- Downward sloping demand curve
- Output price depends on quantity of goods produced and sold
- Price maker instead of taker
What are the two imperfect market competition structures?
- Monopolistic competition
- Oligopoly
In monopolistic, what is the source of market power?
Differentiation
What is vertical differentiation?
Making a product better than products of competitors
What is horizontal differentiation
Making a productive distinctive from those of competitors
What’s an example of vertical differentitation?
BMW vs Skoda
What’s an example of horizontal differentitation?
Coke vs pepsi
In monopolistic competition, price is set above:
Marginal cost
Under monopolistic competition, the firm will earn:
Economic profit
Grocery stores attract clientele based on:
Location
When a new firm enters a monopolistic competition market, the economic profit of current firms is:
Reduced
What’s the difference with a Cournot equilibrium compared to perfect competition?
- Output is less
- Prices and profits are higher
Under a Cournot equilibrium, as the number of firms increases, output:
Moves towards perfect competition
In a Bertrand duopoly, each firm takes the price set by rivals and:
Sets its own profit maximising price
What are two market structure measurement definitions?
- N firm concentration ratio
- Herfindahl index
What is the n firm concentration ratio?
Combined market share of the n largest firms
What is the Herfindahl index?
Sum of squared market shares of each firm in the industry
The Herfindal figure for Perfect competition and monopolistic competition
Usually <0.2
What is the Herfindahl figure for an Oligopoly?
0.2-0.6
What is the Herfindahl figure for a Monopoly
> 0.6
What are the conditions for “fierce competition”
- Market is congestible
- Perceived homogenous products
- Excess capacity
What is the calculation for the lerner index figure?
(P - MC)/P
What affects market concentration?
- Scale economies
- Cost advantages
- Concentration of buyers
What is an entry threshold?
Population needed to support a given number of sellers
What does En mean?
Entry threshold for n sellers
One firm’s strategic choice adversely affects the performance of another if:
They’re competitors
Any firm who produces a substitute product is a:
Competitor
Two products tend to be close substitues if:
- They have similar performance characteristics
- They have similar occasion for use
- They are sold in the same geographic area
Performance characteristics describe:
What the product does to/for the customer
What are some ways to identify competitors?
- CPeD
- Price correlation across time
What is the business’s catchment area?
Where the customers come from
