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24 Cards in this Set

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Oligopoly

Where a few large firms have the majority of the market share

Concentration ratio

The proportion of the market share held by the dominant firms

Predatory pricing

Setting a price that may bankrupt a competitive firm in order to try to take it over

Integration

Combining with other firms

Interdependent

Where actions by one firm will have an effect on the sales and revenue of other large firms in the market

Price war

Where firms competitively lower prices to increase their market share

Reactive behaviour

The action taken by firms in response to a change in behaviour of a competitor

Kinked demand curve

A theoretical approach that endeavours to analyse the reasons for price stability in oligopoly

Brand loyalty

A measure indicating the degree to which consumers will purchase a firm's product rather than a competing firm's product

Discontinuous marginal revenue curve

Region over which a change in marginal costs will not lead to a change in the firm's price and output levels

Game theory

An analysis of how games players react to changing circumstances and plan their response

Zero sum game

Where a gain by one player is matched by a loss by another player

Risk averse

Where one party does not take any action that might promote retaliatory activity by another party

Collusion

Where firms cooperate in the pricing and output policies

Prisoner's dilemma

Where prisoners both choose the worst option

Nash equilibrium

Where the optimum strategy is to maintain current behaviour

Restrictive agreement

Where firms collude to indulge in anti-competitive policy

Joint profits

Where firms agree to maximise shared profits rather than their individual profits

Cartel

A group of firms working together or colluding

Price leader

A firm that establishes the market price that all other firms in the agreement follow

Barometric price leadership

A firm whose price changes are accepted as they are adroit at interpreting market conditions

Parallel pricing

Where firms charge identical prices

Tacit collusion

Where firms have reached an 'agreement' as to each other's behaviour as a result of repeated observations over time

Menu costs

The time and money spent by businesses in changing their prices in line with inflation