5 - concentrated markets: theory of oligopoly Flashcards
where a few large firms have the majority of the market share
oligopoly
the proportion of the market share held by the dominant firms
concentration ratio
setting a price that may bankrupt a competitor firm in order to try to take it over
predatory pricing
combining with other firms
integration
where actions by one firm will have an effect on the sales and revenue of other large firms in the market
interdependent
where the firms competitively lower prices to increase their market share
price war
the action taken by firms in response to a change in behaviour of a competitor
reactive behaviour
a theoretical approach that endeavours to analyse the reasons for price stability in oligopoly
kinked demand curve
a measure indicating the degree to which consumers will purchase a firm’s product rather than a competing firm’s product
brand loyalty
region over which a change in marginal costs will not lead to a change in the firm’s price and output levels
discontinuous marginal revenue curve
an analysis of how games players react to changing circumstances and plan their response
game theory
where a gain by one player is matched by a loss by another player
zero sum game
where one party does not take any action that might promote retaliatory activity by another party
risk averse
where firms cooperate in their pricing and output policies
collusion
where prisoners both choose the worst option
prisoners’ dilemma
