Monopoly Flashcards
Monopoly
Firm that is the sole seller of a product without close substitutes
Imperfect competition
Exists where firms are able to differentiate their product in some way and so can have some influence over price
Barriers to entry
Anything which prevents a firm from entering a market or industry
Patent
Right conferred on the owner to prevent anyone else making or using an invention or manufacturing process without permission
Copyright
Right of an individual or organisation to own things they create in the same way as a physical object to prevent others from copying or reproducing the creation
Natural monopoly
Arises because a single firm can supply a good or service to an entire market at a smaller cost than could 2 or more firms
What is price discrimination
The business practice of selling the same good at diff prices to diff customers
Arbitrage
Process of buying a good in one market at a low price and selling it in another market at a higher price in order to profit from the price difference
Perfect price discrimination
Situation where monopolist knows exactly the willingness to pay of each customer and can charge each customer a different price
How might govs respond to the problem of monopoly
Trying to make monopolised markets more competitive
Regulating the behaviour of the monopolies
Turning some private monopolies into public enterprises
Doing nothing
