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26 Cards in this Set
- Front
- Back
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Experience Goods
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products or services whose quality is undetected when purchased
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Monopoly
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is a single seller where entry is prohibited and there are no close substitutes
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Zero sum game
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sum of payoffs are zero
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free entry and exit
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pure competition assumes this about barriers
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oligopoly
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this market has few firms and heterogeneous or homogeneous products
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simultaneous game
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occurs when all players must choose their actions at the same time
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extended warranty
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helps overcome the problem of adverse selection
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prisoners dilemna
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resulted in a non-cooperative strategy
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barometric price leadership
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this exists when one or few firms set the price
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monopolistic competition
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many firms but the product is differentiated
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incomplete information
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uncertain knowledge of payoffs, choices, or types of opponents a market player faces
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homogeneous products
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one factor that increases likelihood of successful collusion
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short run monopolistic competition
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economic profits exist when in this situation
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cartel
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a group of firms who have agreed to restrict outputs
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subgame
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equilibrium in each part of the game tree
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price elasticity of demand
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optimal markup is calculated using this measure
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search goods
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product or services whose quality is best detected through market research
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maximin strategy
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strategy that minimizes absolute losses
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marginal cost
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at output where marginal revenue equal this, profit is maximized
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pure competition
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in this, competitive firms are price takers
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nash equilibrium
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occurs if none of the players can improve their payoff
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collusion
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where competing firms agree and act together so they can earn monopoly like profits in the long run
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asymmetric information
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unequal or dissimilar knowledge among market participants
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sequential game
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is one in which there is an explicit order or play
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cournot model
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assumes each firm maximizes profit and each firm believes the other will not change output as they change output
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limit pricing
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methodology used to avoid entry by setting prices low, strategy to eliminate competition
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