a market with many buyers and sellers selling homogenous goods with perfect information and freedom of entry and exit

efficiency in the long run; concerned with new technology and increases in productivity which causes efficiency to increase over a period of time

where economies of scale are so large that not even a single producer is able to fully exploit them; it is more efficient for there to be a monopoly than many sellers

when a monopolist charges different prices to different consumers for an identical good/service with no differences in costs of production

when firms produce at a cost above the AC curve

Monopolistic Competition

where there are a large number of buyers and sellers who are relatively small and act independently, selling non-homogenous goods

occurs when firms agree to work together, for example by setting a price or fixing the quantity they produce

the combined market share of the few top firms in a market

used to predict the outcome of a decision made by one firm, when it has incomplete information about the other firm

the actions of one firm directly affects another firm

Non-Collusive Oligopoly

when firms in an oligopoly compete against each other, rather than making agreements to reduce competition

Non-Price Competition

when firms compete on factors other than price, for example customer service or quality; they aim to increase the loyalty to the brand which makes demand more inelastic

where a few firms dominate the market and have the majority of market share, they act interdependently

collusion where firms come to a formal agreement, e.g a cartel

collusion where there is no formal agreement, e.g price leadership

when there is a threat of new entrants into the market, forcing firms to be efficient

Perfectly Contestable Market

a market with no barriers to entry, where a new firm can easily enter and compete against incumbent firms completely equally

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4. Market Structures

Micro

Term	Definition
Perfect Competition	a market with many buyers and sellers selling homogenous goods with perfect information and freedom of entry and exit
Dynamic Efficiency	efficiency in the long run; concerned with new technology and increases in productivity which causes efficiency to increase over a period of time
Monopoly	a single seller in the market
Natural Monopoly	where economies of scale are so large that not even a single producer is able to fully exploit them; it is more efficient for there to be a monopoly than many sellers
Price Discrimination	when a monopolist charges different prices to different consumers for an identical good/service with no differences in costs of production
X-Inefficiency	when firms produce at a cost above the AC curve
Monopolistic Competition	where there are a large number of buyers and sellers who are relatively small and act independently, selling non-homogenous goods
Collusion	occurs when firms agree to work together, for example by setting a price or fixing the quantity they produce
Concentration Ratio	the combined market share of the few top firms in a market
Game Theory	used to predict the outcome of a decision made by one firm, when it has incomplete information about the other firm
Interdependent	the actions of one firm directly affects another firm
Non-Collusive Oligopoly	when firms in an oligopoly compete against each other, rather than making agreements to reduce competition
Non-Price Competition	when firms compete on factors other than price, for example customer service or quality; they aim to increase the loyalty to the brand which makes demand more inelastic
Oligopoly	where a few firms dominate the market and have the majority of market share, they act interdependently
Overt Collusion	collusion where firms come to a formal agreement, e.g a cartel
Tacit Collusion	collusion where there is no formal agreement, e.g price leadership
Contestable Market	when there is a threat of new entrants into the market, forcing firms to be efficient
Perfectly Contestable Market	a market with no barriers to entry, where a new firm can easily enter and compete against incumbent firms completely equally

Created by: 19thomps

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