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18 Cards in this Set
- Front
- Back
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Cartel
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group of firms acting together (colluding) to limit output, raise price, and increase economic profit
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Collusive Agreement
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Agreement between 2 or more producers to form a cartel
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Oligopoly
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*Natural legal barriers, prevent new entry to firm
*small number of firms compete |
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Predatory Pricing
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set low price to drive competitors out of market
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Limit Pricing
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set price at high level so inflicts cost on entrant
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Duopoly
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2 firms compete in oligopoly (2 main taxi services, 2 main veterinarians etc.)
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Antitrust Law
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law that regulates oligopolies from behaving like monopolies
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Sherman Act
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prevented formation of monopolies and actions taken in restraint of trade
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Clayton Act
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established federal trade commission. Prohibited predatory pricing, tying arrangements
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tying arrangements
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exclusive dealing
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Market failure
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concept private actors do NOT always allocate output efficiently, fairly or in public interest
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free riders
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receives benefits at no cost to themselves
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conglomerate
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combinations of different firms
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strategically interdependent
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respond to what others are doing
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price points
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reference points that help firms in creating rational pricing strategies
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Substitution price points
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price near one's competitiors price
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customary pricing points
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price expected and accepted by customers
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perceptual price points
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goal of achieving a psychological effect on buyers
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