Explore tens of thousands of sets crafted by our community.
Market Structures
25
Flashcards
0/25
Perfect Competition
Many firms, homogeneous products, no barriers to entry, price takers, perfect information, and optimal allocation of resources.
Monopolistic Competition
Many firms, differentiated products, some barriers to entry, some pricing power, non-price competition is significant.
Oligopoly
Few firms, may produce homogeneous or differentiated products, significant barriers to entry, firms have considerable control over price, interdependent decision-making.
Monopoly
One firm, unique product with no close substitutes, high barriers to entry, price maker, potentially supernormal profits in the long run.
Duopoly
Two firms dominate the market, high barriers to entry, firms may collude or compete, the reaction function is important for predicting competitor behavior.
Monopsony
One buyer, controls market price through buying power, may exploit power to drive prices down, affects suppliers' choices and pricing.
Natural Monopoly
A single firm can supply the entire market at a lower cost than two or more firms, often due to high fixed costs, usually regulated by the government.
Bilateral Monopoly
Market with only one supplier and one buyer, negotiations determine price, can result in unstable prices depending on bargaining power.
Contestable Market
No barriers to entry or exit, even with few firms, potential competition affects pricing and profits, the threat of hit and run competition.
Concentrated Market
Few firms own a large percentage of market share, high level of market power, pricing tends to be above competitive levels.
Fractured Market
Large number of firms with small market shares, no dominant players, high level of competition, tends to lead to competitive pricing.
Price Leadership
Dominant firm sets price, others follow, can lead to more stable prices in the market, often seen in oligopolies.
Collusion
Firms work together to set prices or output, often illegal, can result in non-competitive pricing, higher than in competitive markets.
Cartel
Group of firms that collude to control prices and limit competition, illegal in many countries, aims to maximize joint profits.
Predatory Pricing
Firm sets prices below cost to drive competitors out of the market, often a short-term strategy, could lead to a monopoly.
Dumping
Selling a product in a foreign market below cost or below home market price, often a strategy to gain market share, can lead to international trade disputes.
Price Discrimination
Charging different prices to different consumers for the same product, requires market power and separation of markets, can increase firm's profits.
Price Skimming
High initial price for a new product, which is lowered over time, recovers development costs quickly, targets different consumer segments over time.
Penetration Pricing
Setting a low price to enter a competitive market, aims to attract customers quickly, prices may increase once market share is gained.
Cost-Plus Pricing
Adding a standard markup to the cost of the product, ensures a profit on each item sold, common in less competitive markets.
Value-Based Pricing
Price set based on customer's perceived value of the product, can allow for higher margins, requires understanding of customer's willingness to pay.
Two-Part Tariff
Pricing model with a fixed fee plus a variable usage fee, ensures revenue even with low usage, common in utilities and club memberships.
Peak Load Pricing
Higher prices during periods of peak demand, helps manage demand and capacity constraints, common in electricity markets and transportation.
Barriers to Entry
Factors that prevent or hinder new firms from entering a market, can lead to less competition and higher prices, include legal, technological, or brand loyalty barriers.
Economies of Scale
Cost advantages a firm gets due to the scale of operation, can result in lower prices for consumers, significant barrier to entry for new firms.
© Hypatia.Tech. 2024 All rights reserved.