Perfect & imperfect markets and monopology

• Demerger: When a firm sells parts of its business to create separate smaller firms
• Duopoly: Any market that is dominated by two organisations
• Anti-competitive behaviour: Business strategies employed to deliberately limit contestability within markets
• Artificial barrier to entry: Barriers to market entry that are man-made, i.e., non-natural.
• Break even: The same as normal profit
• Collusion: Illegal cooperation between multiple firms, forming a cartel.
• Concentrated market: A market with very few (in its most extreme cases, 1) firms.
• Consumer surplus: Difference between the prices consumers are willing to pay and the prices they actually pay
• Deadweight loss: Loss of social welfare derived from economic activity
• Duopsony: Two major buyers of a good or service in a market
• Divorce of ownership and control: The process in which owners become increasingly separated from those managing the business
• Concentration ratio: The total market share of the leading firms in an industry; these firms' output as a percentage of total output.
• Cartel: Formed by groups of producers when they illegally decide to collude and not compete
• Dynamic efficiency: Improvements to efficiency in the long run, brought about by investment into research and development
• Entry barrier: Make it impossible/more difficult for firms to enter a market.
• Innovation: Improving upon an existing product or process.
• Interdependence: Where the actions of one firm influence the actions of other firms in the market
• Invention: Creation of a new product or process.
• Kinked demand curve: Assumes a business may face a dual demand curve for its product based on the oligopoly market structure
• Limit pricing: Lowering the price of a good or service to around average cost, creating an artificial barrier to entry.
• Market share maximisation: When a firm maximises their percentage share of the market in which it sells its product.
• Market structure: The characteristics of a market.
• Hit and run: Firms enter a market, make supernormal profits, then leave; possible due to low barriers to entry and exit
• Monopoly: Market with only one supplier/ one dominant supplier
• Merger: Multiple firms uniting to form one larger firm
• Monopoly power: The ability of a firm to be a price maker rather than a price taker; the ability to set prices.
• Monopsony: Market with only one consumer/ one dominant consumer
• Natural barrier to entry: Barriers to market entry that are not man-made.
• Natural monopoly: When the ideal number of firms in an industry is 1.
• Exit barrier: Make it impossible/more difficult for firms to exit a market.
• Predatory pricing: Temporarily lowering a good's price below average cost, creating an artificial barrier to entry.
• Price competition: Reducing the price of a product, thus stripping demand from competitors.
• Price discrimination: When a firm charges different prices to different groups of consumers for the same good
• Patent: Government legislation protecting a firm's right to be the sole producer of a good.
• Product differentiation: Differences between multiple similar goods and services.
• Profit maximisation: Occurs where the positive difference between total revenue and total costs is at its highest.
• Pure monopoly: Only one firm in a market.
• Sales maximisation: When sales revenue is at its highest.
• Satisficing: Due to conflicts of interests, managers often run films to make the minimum level of acceptable profit (as specified by owners)
• Shareholder: Economic agents concerned on the growth of the firm for monetary reasons