Micro Booklet 5 Flashcards
(30 cards)
Cartel
When colluding firms act together, effectively behaving as if they were one firm
Collusion
When independent firms agree to jointly fix output or prices rather than competing
Competition Policy
Government policy to remove the use of monopoly power in order to protect consumer interest
Concentration Ratio
The proportion of sales in a market accruing to a given number of leading firms
Contracting Out
The process by which state-owned firms hires a private firm to provide ancillary services
Customer Inertia
The tendency of consumers to remain with one provider when there may be a better value option availiable
De-regulation
The process of removing regulations
Dominant Strategy
In game theory, the most rewarding option
Hit-and-run Entry
When firms enter a market in pursuit of economic profit and then leave the market once it has been exhausted
First Degree Price Discrimination
Charging each individual the maximum that they are prepared to pay for a product
Limit Pricing
Charging the price that is so low that there is no incentive for firms to enter the market as it would be unprofitable to do so
Market Share
The proportion of sales in a market accruing to a particular firm
Monopolistic Competition
A highly competitive market structure with many firms who are able to differentiate their product
Nash Equilibrium
An outcome in a game where no player can improve their pay-off simply by changing their own decision
Nationalisation
The process by which a firm or industry is taken into state ownership
Natural Monopoly
An industry with very high fixed costs, which lends itself ideally to a single firm, so that average costs can be spread
Oligopoly
A market dominated by a few firms between whom there is conscious interdependance
Perfect Competition
A market with many buyers and sellers of a homogenous product, freedom of entry and exit and perfect knowledge
Predatory Pricing
Charging a price that is so low that rival firms cannot compete and are force to leave the market
Price Fixing
An agreement between rival firms to maintain prices that are artificially low or high
Price Leadership
Firms follow the price set by the market leader without the need for an explicit agreement
Price Discrimination
The practice of charging different consumers different prices for the same good or service
Privatisation
The process by which a firm or industry is transferred from state ownership into private ownership
