Market Structures Monopoly Flashcards
Monopoly
The only seller of a GnS that does not have a close sub
Barrier to Entry
Anything that prevents new firms from entering a industry
Patent
Exclusive right to prod. and sell a product for a period of time from its invention
Copyright
Legal right to exclusive use of a creation for creator and heirs
Public Franchise
The gov. says a firm is the only legal provider of a GnS EG. Western Power
Network Externalities
Exist when the usefulness of a product increases with the number of consumers using it
Natural Monopoly
Where a firm has an Econ. of Scales so large its Average Variable Cost is lower then multiple firms to supply whole market
Market Power
The ability of a firm to charge a price greater than MC
Collusion
When firms agree to charge the same price or not to compete
Horizontal Merger
A merger between firms in the same industry
Vertical Merger
A merger between firms at different stages of prod. of a good
Price discrimination
Charging different customers different prices for the same product when price differences are not due to prod. costs
1st Degree PD
Firms charge consumer the price they are willing to pay, no CS, No DWl
2nd Degree PD
Consumers self-select into groups with separate elasticities which are charged separate prices
3rd Degree PD
Consumers are forced into different groups with different elasticities so they are charged different prices
