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15 Cards in this Set
- Front
- Back
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Cartel |
A formal agreement among firms (or countries) in an industry to set the price of a product and establish the output of the individual firms (or countries) or to divide the market for the product geographically |
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Collusion |
A situation in which firms act together and in agreement (collude) to fix prices, divide a market, or otherwise restrict competition |
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Concentration ratio |
The percentage of the total sales of an industry made by the four (or some other number) largest seller in the industry |
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Differentiated oligopoly |
An oligopoly in which the firms produce a differentiated product |
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Excess capacity |
Plant resources that are underused when imperfectly competitive firms produce less output than that associated with achieving minimum average total cost |
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Herfindahl index |
A measure of the concentration and competitiveness of an industry; calculated as the sum of the squared percentage market shares of the individual firms in the industry |
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Import competition |
The competition that domestic firms encounter from the products and services of foreign producers |
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Inter-industry competition |
The competition for sales between the products of one industry and the products of another industry |
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Monopolistic competition |
A market structure in which many firms sell a differentiated product, into which entry is relatively easy, in which a firm has some control over its product price, and in which there is considerable nonprice competition |
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Mutual interdependence |
A situation in which a change in price strategy (or in some other strategy) by one firm will affect the sal and profits of another firm (or other firms). Any firm that makes such a change can expect rivals to react to the change |
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Non-price competition |
Competition based on distinguishing one's product by means of product differentiation and then advertising the distinguished product to consumers |
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Oligopoly |
A market structure in which a few firms sell either a standardized or diffentiated product, into which entry is difficult, in which the firm has limited control over product price because of mutual interdependence (except when there is a collusion among firms), and in which there is typically nonprice competition |
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Price leadership |
An informal method that firms in an oligopoly may employ to set the price of their product: One firm (the leader) is the first to announce a change in price, and the other firms (the followers) soon announce identical or similar changes |
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Price war |
Successive and continued decreases in the prices charged by firms in an oligopolistic industry. Each firm lowers its price below rivals' prices, hoping to increase its sales and revenues at its rivals' expense |
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Product differentiation |
A strategy in which one firm's product is distinguished from competing products by means of its design, related services, quality, location, or other attributes (except price) |
